Speculation on an imminent merger between Jefferson Smurfit Corporation and US paper company Stone Corporation led to frenzied dealing in both company's shares on US markets yesterday.
A merger of the companies would create a packaging group with a stock market value of over $3.9 billion (£2.8 billion) and would generate cost savings of $150 million to $200 million through synergies and rationalisation.
JS Corporation shares jumped $1 1/4 to $20 3/4 in a falling market, trading at over three times the normal volume. The shares of the company which is 46 per cent owned by the Jefferson Smurfit hit a high on the day of almost $21 1/2 but weakened later in a volatile market.
Stone shares traded at about seven times their normal volume and rose to a high of $16 1/2 before slipping back in weak markets to close around $15 3/4, just about unchanged on its overnight level despite the massive trading volumes. Overall the US market fell by about two percentage points pulled back by speculation of an imminent rise in US interest rates.
In Dublin the Jefferson Smurfit share price jumped 10p to 260 in early trading before slipping back in weak markets to close 3p ahead at 253p. Rumours swept the market throughout the day that an announcement of a merger in the US was imminent.
A merger on current stock markets values would result in a dilution of the Smurfit group stake in the merged operation to around 27 per cent unless it makes an injection of cash for more equity.
