The company confirmed it is weighing unsolicited approaches for its EMEA packaging unit and is in discussions with potential buyers, while preparing a London listing in parallel. The shares rose about 7.8%.
International Paper now has two ways to get out of Europe. It is keeping both open.
The packaging maker said Thursday it is "evaluating unsolicited inbound inquiries in relation to its EMEA Packaging Business, and is in discussion with potential bidders." It added: "This process is at an early stage." The company said its planned spin-off of the business, through a listing in London with American depositary receipts, is continuing in parallel.
Private equity firms Lone Star Funds and Atlas Holdings are separately exploring bids for the unit, according to a newspaper report citing people familiar with the matter, which put the business's potential value at less than $6 billion. International Paper did not name any bidder or discuss price.
The shares rose about 7.8% to $34.38 in early afternoon trading.
What is for sale
The company has scheduled a capital markets day for the business, under the DS Smith name, on Nov. 3, an event designed to present it to future public shareholders.
A dual-track process, preparing a listing while entertaining offers, is a common way for sellers to set a floor on price. A listing gives the company a fallback valuation. Bidders who want to buy the business outright have to beat what the market would pay.
Why the stock moved
A cash sale and a spin-off produce different outcomes for International Paper's shareholders. A spin-off hands them shares in a new European company and leaves the valuation to the market. A sale delivers cash at a negotiated price, which could be used to reduce debt or return capital, and removes the execution risk of launching a new listing in a volatile market.
The stock's gain came on the day the company confirmed the talks, though not all of it can be attributed to them.
Market implications
One reading is that competition for the asset improves the terms. Inbound interest from more than one buyer, alongside a listing that can proceed without them, puts International Paper in a position to extract a higher price than a spin-off alone would deliver.
A second reading is that the process is early and the outcome is uncertain. The company has disclosed no terms, private equity bids for industrial businesses often come in below sellers' expectations, and a reported value under $6 billion would have to be weighed against what public investors would pay at the Nov. 3 presentation.
What to watch
The Nov. 3 capital markets day, any statement naming bidders or terms, and whether International Paper sets a timetable for the London listing. Until then, the company has not chosen between the two.