Exchange traded funds that invest in timber and forestry stocks rose Tuesday in the wake of International Paper’s (NYSE: IP) unsolicited bid for Temple-Inland (NYSE: TIN).
Temple-Inland’s board has adopted a so-called poison pill defense to prevent a hostile takeover attempt, according to reports. The company, which businesses include manufacturing packaging and forest products, said the International Paper bid is too low.
Temple-Inland shares jumped more than 40% on Tuesday, while International Paper gained nearly 2%.
The iShares S&P Global Timber & Forestry (NasdaqGM: WOOD) rallied 3%. The $236 million ETF has 3.4% of its assets in Temple-Inland.
Also Tuesday, Guggenheim Timber ETF (NYSEArca: CUT) climbed almost 2%. The fund counts International Paper as its second-largest holding at 5.3% of the portfolio.
“The deal would represent another huge consolidation step in the containerboard industry and would give International Paper almost 40% of the containerboard market,” said Deutsche Bank analyst Mark Wilde, although he added a transaction seems “very unlikely” at the current proposed price.
“We view International Paper’s bid as an ‘opening salvo’ and suspect that there will ultimately be a deal, but at a higher price,” Wilde said.
iShares S&P Global Timber & Forestry
