IP still interested in buying Temple-Inland after knowledge of US$1B lawsuit against Temple-Inland, IP CFO says; analyst says IP may cut its bid price

Kendall Sinclair

LOS ANGELES , August 25, 2011 (Industry Intelligence) – International Paper Co. is still interested in acquiring Temple-Inland Inc., said IP CFO Tim Nicholls, despite news of a US$1 billion federal lawsuit filed against Temple-Inland on Aug. 22, reported the Memphis Daily News on Aug. 25.

Nicholls told an audience at the Memphis Rotary Club on Aug. 22 that the company hasn’t “seen anything that would necessarily impact the transaction we’re trying to complete,” but noted that it’s early.

Royal Bank analyst Paul Quinn said that the market conditions had changed since the original June 6 bid, Bloomberg reported Aug. 24.

“So there may be scope of International Paper to revise its bid price,” Quinn said on Aug. 23.

Deutsche Bank analyst Mark Wilde decreased his estimate from $36 per share to $30/share, according to an Aug. 24 note, citing the lawsuit and the problems stemming from the Temple-Inland paperboard mill in Louisiana.

Temple-Inland shares fell 26% from IP’s original bid of US$30.60 per share when IP placed its original offer on June 6, Bloomberg reported on Aug. 24.

The liquidation trustee of Guaranty Bank filed a US$1 billion federal suit against Temple-Inland – news to which Nicholls said executives were surprised by its “magnitude.” The lawsuit alleged Temple-Inland looted the institution, which went into bankruptcy, reported the Memphis Daily News.

The primary sources of this article are the Memphis Daily News, Memphis, Tennessee on Aug. 25, 2011 and Bloomberg, New York, New York, on Aug. 24, 2011.

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