Deutsche Bank and Merrill Lynch are thought to be advising Madison Dearborn, the US private equity house, on what could become one of the biggest leveraged buyouts (LBOs) in Europe.

The firm's bid for Jefferson Smurfit, the Irish paper and packaging group, is expected to be between €3.20 and €3.35 a share, valuing the target at up to €3.6bn ($3.4bn).