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DS Smith shares jump on International Paper's $7 billion takeover bid

Published 03/26/2024, 04:42 PM
Updated 03/27/2024, 05:15 AM
© Reuters.  International Paper (IP) shares down as DS Smith confirms takeover negotiations
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(Updated - March 27, 2024 5:13 AM EDT)

DS Smith (DITHF) confirmed on Tuesday that it is in talks with International Paper (IP) regarding a proposed all-stock transaction. This deal, put forward by the U.S.-based firm, values the British paper and packaging company at approximately 5.72 billion pounds ($7.22 billion).

Shares of DS Smith popped more than 7% in London trading Wednesday.

This development comes after DS Smith had already agreed to a £5.1 billion ($6.5 billion) acquisition offer from Mondi Plc (LON:MNDI) earlier in the month.

DS Smith confirmed it is in preliminary talks with International Paper about a possible all-share offer, following a report by Sky News that the pulp and paper company was contemplating a bid of £5 billion or more for the company.

The paper and packaging industry has seen a wave of consolidation, highlighted by last year's agreement between Smurfit Kappa Group Plc and WestRock Co., which aimed to create a leading entity in the sector.

The industry witnessed a surge in demand amid the pandemic as online shopping activity grew, though this trend has moderated with the return of consumers to physical stores.

Under the terms of the proposal, DS Smith's shareholders would receive 0.1285 shares of International Paper for every DS Smith share they hold. This arrangement values DS Smith shares at 415 pence each, translating to a 48% premium.

In comparison, the bid from Mondi Plc earlier this month offered a 33% premium over DS Smith's share price on February 7, the day before DS Smith announced Mondi's initial acquisition interest.

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