International Paper Clinches Deal To Buy DS Smith | ESM Magazine

International Paper said that it has agreed to an all-share deal to buy DS Smith, valuing the British paper and packaging firm at £5.8 billion (€6.79 billion).

Upon completion of the combination, DS Smith shareholders will own about 33.7% and International Paper shareholders will own the rest of the combined company, which plans to seek a secondary listing in London.

DS Smith said it would recommend shareholder to back the deal with International Paper, adding that it had recently received proposals from both International Paper and Mondi, but the U.S. company was now in a position to make a firm offer.

The two suitors have an April 23 deadline to make a firm offer or walk away.

'Compelling Strategic Rationale'

In a joint statement, the boards of International Paper and DS Smith said that they believed there was a 'compelling strategic and financial rationale' for the two companies to come together.

They said that the deal would 'create a truly global leader in sustainable packaging solutions, focused on the attractive and growing North American and European regions'.

The merger is also expected to enhance customer value through expanded offerings, innovation, and broader geographic reach, the companies said, as well as presenting an opportunity to optimise operations such as mill networks, supply chains, and freight costs.

By leveraging the expertise of both management teams, both International Paper and DS Smith expect to 'drive substantial and achievable synergies through global scale and optimisation'.

In addition, International Paper anticipates that the merger will yield substantial benefits, including generating at least $514 million (£413 million) in pre-tax cash synergies annually by the end of the fourth year following the effective date.

Additional reporting by ESM