International Paper and DS Smith have reached an agreement on a recommended All-Share Combination that the companies say will deliver significant shareholder value and create a global leader in sustainable packaging solutions, focused on the ‘attractive and growing’ North American and European regions.
The agreement is subject to approval by shareholders of both businesses but has been recommended by the respective boards of International Paper and DS Smith. It is not yet clear where this leaves the earlier proposed deal between Mondi and DS Smith, which was reported by Digital Labels & Packaging on 8 March 2024 (Mondi makes move on DS Smith).
The terms of the Combination with International Paper (IP) imply a transaction value of approximately $9.9 billion (€9.3 billion). Each DS Smith share is valued at 415 pence per share, and will result in IP issuing 0.1285 shares for each DS Smith share, resulting in pro forma ownership of 66.3 percent for IP shareholders and 33.7 percent for DS Smith shareholders. The companies said the Combination is expected to close by the fourth quarter of 2024.
‘Combining with DS Smith is a logical next step in IP’s strategy to drive profitable growth by strengthening our global packaging business,’ said Mark S. Sutton, chairman and CEO of IP. ‘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. We are confident this combination will drive significant value for our employees, customers, and shareholders.’
The deal, if approved, will bring together the two businesses’ capabilities and expertise, creating a ‘winning position in renewable packaging across Europe, while also enhancing IP’s North American business’.
CEO of DS Smith, 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. It combines two focused and complementary businesses.
‘DS Smith has grown significantly through a dedication to customers, focus on innovation, quality of packaging and high levels of service. In a dynamic sustainable packaging landscape, the combination will enhance our global proposition to customers, create opportunities for colleagues and drive value for shareholders who can remain fully invested in such an exciting business.’
Among the specifics created by the ‘compelling strategic opportunity’ of the agreement are: the possibility of improve profitability through integrating complementary business models, including optimising the combined network of mills, box plants and supply chains; strengthening customer value through enhanced offerings, innovation and geographical reach; accelerating sustainability efforts; and delivering substantial synergies through global scale and optimisation.
