International Paper Offers USD 7.22 Billion Acquisition Deal to DS Smith, Giving Stiff Competition to Mondi - Papermart

International Paper Offers USD 7.22 Billion Acquisition Deal to DS Smith, Giving Stiff Competition to Mondi

International Paper makes an all-stock acquisition deal to DS Smith worth USD 7.22 billion, giving stiff competition to Mondi, which earlier made an all-share takeover offer worth USD 6.51 billion.

Apr 3, 2024

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Leading global forestry and paper company, International Paper, has made an all-stock takeover offer of 5.72 billion pounds to British paper packaging firm DS Smith, setting the stage for a multi billion-pound transatlantic bidding war with Mondi, which in February offered an all-share acquisition deal to its UK rival worth 5.14 billion pounds.

The announcement was made recently by DS Smith, stating that the Board was progressing its discussions with International Paper regarding the proposal. It said the Board acknowledged the strategic merits and potential for value creation through a combination with International Paper. 

The proposal has stirred a bidding war involving billions of dollars for the acquisition of DS Smith.

Under the terms of the U.S. group’s proposal, DS Smith shareholders would receive 0.1285 shares in International Paper for each share they own in DS Smith. That would give them 33.8 percent of the combined company. Under Mondi’s proposal, DS Smith shareholders would get control of 46 percent of the enlarged group. International Paper, which confirmed the talks, has until April 23 to make a firm offer.

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On March 7, the Boards of Directors of Mondi PLC and DS Smith PLC announced that they had reached an agreement in-principle for Mondi to acquire DS Smith.

The agreement covered key financial terms of a possible all-share offer by Mondi for DS Smith, pursuant to which Mondi would acquire the entire issued and to-be-issued share capital of DS Smith, according to the companies.

The six-page document said the completion of the merger was conditional on regulatory approval and the completion of mutual confirmatory due diligence to the satisfaction of Mondi and DS Smith.

The merger would see Mondi shareholders owning 54 percent of the combined company, while DS Smith shareholders would own the remaining 46 percent.

It called for Mondi board Chair Philip Yea to remain in that position; Mondi CEO Andrew King to retain that post; and Mike Powell of Mondi to remain chief financial officer. Three non-executive directors of DS Smith were expected to join an enlarged Mondi Group board.

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The deal involved the combination of two companies with production assets in Europe, North America and South Africa. Mondi operates six containerboard mills globally, some of which rely more heavily on virgin fiber than recycled content. The firm’s containerboard mills are in Finland, Italy, Poland, Slovakia, South Africa and Turkey.

In North America, Mondi operates a newly acquired unbleached kraft pulp mill in Alberta, a kraft paper facility in Minnesota and about a half-dozen other downstream facilities in the United States.

DS Smith operates 10 paper and board mills in Europe and two U.S. mills in Georgia and Pennsylvania. The company emphasizes circularity in its operations and marketing materials, including the recyclability of its products and use of recycled content.