Unusual and Questionable: The $15 Billion Pulp Deal Between Suzano and IP

According to 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, close to Suzano’s market value.

Suzano is the world’s largest pulp producer, while International Paper is focused on North American corrugated cardboard and packaging. Despite some overlap between their businesses, the speculated acquisition would help Suzano diversify geographically and reduce China risk. However, the large scale of the arrangement for Suzano raises questions about the low synergy between these two companies.

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 may not have revolutionary effects on Finnish companies. The stock market did not react positively to the news, indicating skepticism about the deal. It remains to be seen whether the deal will go through or fall through due to these concerns.

Despite potential benefits, Viljakainen suggests that this rumored deal raises questions due to its unusual nature and scale for both companies involved. He believes that it may eventually fall through due to these concerns.