Temple-Inland Investor Files Suit Over Takeover Bid

(Corrects sequence of events in fourth paragraph of story published July 25.)

Temple-Inland Inc. (TIN) was sued by an investor seeking to force the producer of cardboard shipping boxes to consider a $3.31 billion takeover offer by International Paper Co. (IP)

Temple-Inland directors’ “utter refusal” to hold talks is unreasonable and not in the best interests of the company or its shareholders, investor Alan R. Kahn said in a complaint filed today in Delaware Chancery Court in Wilmington. Kahn seeks to represent all Temple-Inland shareholders in his request for a court order directing the company to consider and respond in good faith to acquisition offers.

“The director defendants’ selfish refusal to negotiate deprives Temple-Inland’s stockholders of the certainty of receiving a significant immediate cash premium versus waiting years for a recovery in building products,” lawyers for Kahn said in the complaint. “Their rejection also ignores that the economic recovery is slow, which implies a slow recovery in packaging markets.”

International Paper, the world’s largest pulp and paper maker, took its buyout offer directly to shareholders on July 12. Temple-Inland said six days later the $30.60-a-share cash bid “grossly undervalues” the Austin, Texas-based company.

‘Unrealistic’ Expectations

Tom Ryan, a spokesman for Memphis, Tennessee-based International Paper, said in an e-mail on July 18 that Temple’s board had “unrealistic” price expectations.

Kahn argued in his complaint that it would be in the best interest of Temple-Inland shareholders for the company to take advantage of the proposed transaction or at least negotiate actively with International Paper.

“The director defendants’ stubborn refusal jeopardizes any chance that Temple-Inland shareholders will have the opportunity to consider a higher per share price offer by International Paper,” Kahn said in the complaint.

Chris Mathis, a spokesman for Temple-Inland, didn’t immediately return a phone call seeking comment on the complaint.

The case is Kahn v. Temple-Inland, CA6702, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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