Jefferson Smurfit, the world’s biggest producer of container board and corrugated containers, has agreed to a €3.7 billion leveraged buy-out from US private equity house Madison Dearborn Partners. The deal (see June issue, page 5) is due to be sealed by the end of August.

Madison Dearborn, a major financial investor in the paper and packaging industry, has offered €2.15 per share in cash for the Irish packaging giant’s core business. Analysts believe it could re-sell Smurfit eventually.

The group’s shareholders will retain a stake in its remaining asset, Smurfit-Stone Container, receiving one share for every 16 in the overall group. Smurfit-Stone has hired Morgan Stanley as a strategic adviser following the agreed offer for Smurfit, its largest shareholder.

Michael Smurfit, chairman and ce of Jefferson Smurfit, holds a seven per cent stake in the company, and other members of the family have significant interests. He is expected to become chairman of MDCP Acquisitions, the Madison Dearborn vehicle being used to take over the group.