Mergers & acquisitions : Portucel and Suzano Papel e Celulose

The pulp and paper industry is, nowadays, facing challenges associated with the lack of demand growth, pushing firms to adapt to intense competition and industry-wide overcapacity. In order to remain profitable and achieve sustainable competitive positions, industry players have relied on M&A to achieve scale and expand into growing markets in emerging countries. The industry concentration conducted through mergers has been able to deliver value to shareholders while changing the overall competitive landscape. This dissertation’s goal is to propose a merger between Suzano Papel e Celulose and Portucel. The proposition is supported by a review of the main literature on M&A, a thorough industry and company analysis, and a valuation of each individual firm and its combination. It is concluded that Suzano should acquire Portucel in an all-stock offer, valuing the Portuguese firm at €4.32, a premium of 55% over its 31 December 2013 market capitalization. Through the proposed takeover offer, Portucel would be entitled to 46% of the merged firm, with the remaining 54% allocated to Suzano’s shareholders