International Paper’s shareholders will own 66.3%, whereas DS Smith’s shareholders will hold the remaining 33.7% in the enlarged corrugated packaging entity which will generate around 90% of revenue from sustainable fibre-based packaging
DS Smith agrees to be acquired by International Paper in an all-stock deal. (Credit: Billy Hathorn/Wikimedia Commons)
Paper and pulp firm International Paper (IP) has sealed an agreement to acquire UK-based packaging firm DS Smith in an all-stock deal that values the latter at £5.8bn on a fully diluted basis.
The deal represents an enterprise value of around £7.8bn for DS Smith.
As per the parties, the deal is expected to create a global leader for sustainable packaging solutions with a focus on the North American and European markets.
International Paper’s offer surpassed that of rival bidder Mondi, which proposed £5.14bn for a business combination with DS Smith.
The New York Stock Exchange (NYSE)-listed International Paper will exchange 0.1285 of its shares for each share of the London Stock Exchange-listed DS Smith. This values each of the DS Smith’s shares at 415p.
As per the share exchange ratio, International Paper’s shareholders will own 66.3% of the combined entity, whereas DS Smith’s shareholders will hold the remaining 33.7%.
DS Smith CEO Miles Roberts said: “The combination with IP is an attractive opportunity to create a truly international sustainable packaging solutions leader that is well positioned in attractive and growing markets across Europe and North America.”
According to International Paper, the combination will result in a corrugated packaging entity which will generate around 90% of revenue from sustainable fibre-based packaging.
The deal, which combines DS Smith’s European sales of $9.4bn in FY23 with International Paper’s $1.5bn sales in the same period, will also expand the latter’s presence and capabilities in Europe.
Additionally, the containerboard capacity of the British firm will be integrated with International Paper’s mill system to boost the combined integration rate.
International Paper Chairman and CEO Mark Sutton said: “Combining with DS Smith is a logical next step in IP’s strategy to drive profitable growth by strengthening our global packaging business.
“DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements IP’s capabilities and will accelerate growth through innovation and sustainability.”
It is anticipated that the deal will close by Q4 2024, subject to approvals from shareholders of both packaging firms and regulatory clearances in the US and Europe.
The primary listing of the combined entity will be on the NYSE and a secondary listing on the London Stock Exchange.
It will be led by Andrew Silvernail as CEO and up to two DS Smith’s non-executive directors will be invited to join the combined company’s board following the completion of the combination.
The enlarged packaging firm will be based in Memphis, Tennessee, with a Europe, Middle East, and Africa (EMEA) headquarters at DS Smith’s current London office.