International Paper in Bid to Takeover DS Smith
International Paper has recently extended a takeover proposal to DS Smith, a leading UK-based paper and packaging group. This proposition has opened up the possibility of an exciting bidding war for DS Smith, which had previously struck a deal with competitor Mondi.
The proposal from International Paper, a renowned US-based company, comes in the form of an all-share offer equivalent to 415p per share, valuing DS Smith at approximately £6.8 billion including debt. This proposition signifies a significant premium compared to DS Smith’s previous agreement with Mondi, which implied a value of 373p per share or closer to a £6.2 billion enterprise value.
DS Smith’s board has acknowledged the strategic merits and potential for value creation through a combination with International Paper, although it has emphasized that there is no certainty whether a full offer will materialize. Concurrently, the company is continuing its discussions with Mondi, weighing its options carefully.
For small businesses, this proposed merger holds promise. A union between DS Smith and International Paper would create a new global leader in sustainable packaging, well-positioned to serve the evolving needs of growing markets. Under the proposed merger with Mondi, DS Smith shareholders would hold 46 percent of the new entity, whereas a combination with International Paper would result in a 34 percent stake for DS Smith shareholders in the combined company.
International Paper’s offer represents a significant premium, marking a 48 percent increase over DS Smith’s share price at the close of trading on February 7, just before the Mondi approach became public. This proposal comes amidst a wave of consolidation within the packaging sector, reflecting the dynamic nature of the industry.
Having weathered the challenges posed by the COVID-19 pandemic, during which parcel deliveries surged, the packaging industry is now navigating shifting demand patterns and rising costs. In this context, International Paper’s proposal underscores its commitment to driving sustainable growth and innovation.
With approximately 39,000 employees and $18.9 billion in net sales last year, International Paper brings a wealth of experience and resources to the table. Founded in 1898 and headquartered in Memphis, Tennessee, the company has consistently demonstrated its leadership in the sector.
Moreover, International Paper’s recent appointment of Andrew Silvernail as the new chief executive signifies a strategic move aimed at reinforcing its leadership position. Silvernail’s extensive experience, including his previous role at private equity group KKR, positions him well to steer the company towards continued success.
Notably, International Paper’s interest in DS Smith echoes its previous bid for Smurfit Kappa in 2018, highlighting its persistent pursuit of strategic opportunities. As discussions unfold and decisions are made, the packaging landscape stands poised for transformation.
For small businesses, this development presents an opportunity to align with a forward-thinking partner committed to sustainability and innovation. As the industry evolves, embracing strategic partnerships and exploring new avenues for growth will be key to unlocking success.
At Greene Recycling, we recognize the importance of sustainable packaging solutions for small businesses. Stay tuned for further updates on this exciting development and explore how we can support your sustainability initiatives with cardboard bale pickups. Together, let’s pave the way for a greener, more sustainable future.