Why International Paper Rallied Today
Key PointsInternational Paper may be close to selling off its European business.
Shares of International Paper (IP) surged 7.6% on Thursday, reaching 2:28 p.m. EDT, following news that two private equity firms may bid for the company's European business. The European segment, formerly known as DS Smith, was purchased by International Paper for $9.9 billion in 2024, but has since struggled with revenue declines and operating losses.
Reports indicate that the total sale price could be below $6 billion, a 40% discount to the original purchase price. While this sale would alleviate some pressure on International Paper's overall results, the company still carries $8.5 billion in net debt. The North American segment, which has remained profitable, saw a 4.5% revenue decline and 26.4% operating income drop in the last quarter.
With both the European and North American businesses showing signs of struggling, today's rally may be a one-off relief rally rather than a positive indicator for the company's future growth prospects in the paper packaging industry.
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