International Paper Company has confirmed its proposal to acquire DS Smith plc ("DS Smith") through an all-equity proposal. Under the terms of the Proposal, DS Smith shareholders would receive 0.1285 shares in International Paper for each share they own in DS Smith. This represents a value of 415 pence and a premium of 48 per cent to DS Smith’s undisturbed share price on February 7, 2024, of 281 pence per DS Smith share.
The combined group resulting from this acquisition is expected to be a truly global leader in sustainable packaging solutions, with DS Smith shareholders owning approximately 33.8 per cent of the combined group. The acquisition is also anticipated to significantly strengthen the combined corrugated packaging business in Europe, driving significant synergies including higher integration, commercial and operational improvements, and economies of scale across sourcing, supply chain, and administration.
In accordance with Rule 2.6(a) of the U.K. Takeover Code, International Paper is required to announce a firm intention to make an offer for DS Smith by 5.00 p.m. on April 23, 2024. If finalized, the acquisition is expected to result in significant value creation for both International Paper and DS Smith shareholders, while maintaining an investment grade credit rating for the combined group.
The financial and strategic rationale for this acquisition is underpinned by the potential to integrate mill and box networks, balance the paper positions, and optimize the supply chains of both companies in Europe and the US. Furthermore, the acquisition is expected to leverage the market expertise of both management teams to enhance innovation, solutions, and sustainable products for all customers.
International Paper's acquisition proposal marks a significant development in the packaging industry, with the potential to create a global leader in sustainable packaging solutions and drive value for both companies' shareholders. Following these announcements, the company's shares moved 2.2%, and are now trading at a price of $39.05. If you want to know more, read the company's complete 8-K report here.