Suzano’s Purchase Offer of $15 Billion for IP Raises Question about Synergies and Concerns among Investors

According to a recent report by Inderes analyst Antti Viljakainen, the rumored deal between Brazilian pulp producer Suzano and American International Paperia (IP) is unusual and questionable. Reuters reported on Tuesday that Suzano approached IP with a potential purchase offer of $15 billion, which is close to Suzano’s market value. However, it seems that the deal may not have much synergy between the two companies, and its large scale has raised concerns among investors.

Suzano is the world’s largest pulp producer, while International Paper is focused on North American corrugated cardboard and packaging. Finnish forest companies like UPM and Stora Enso operate in Europe, with minimal overlap between their businesses and the potential deal between Suzano and IP. If the deal were to materialize, it would have a consolidating effect on the global market, but it may not have revolutionary effects on Finnish companies.

Despite potential benefits such as diversification for Suzano and reducing China risk, the rumored acquisition raises questions about its low synergy with IP and its large scale. The stock market did not react positively to this news, indicating skepticism about the deal. It remains to be seen whether the deal will go through or fall through due to these concerns. However, Viljakainen suggests that if synergies are not found or other issues arise, it may eventually fall through due to these concerns.