International Paper to Acquire DS Smith in $9.9B Deal

International Paper (IP) has announced a significant agreement to acquire DS Smith, creating a global leader in sustainable packaging solutions with a focus on the North American and European regions. The terms of the combination value each DS Smith share at 415 pence per share, resulting in pro forma ownership of 66.3 percent for IP shareholders and 33.7 percent for DS Smith shareholders, with an implied transaction value of approximately $9.9 billion.

The agreement is expected to achieve significant synergies of at least $514 million, with 92% of the synergies coming from cost synergies such as operational, overhead, and procurement synergies. It is anticipated that approximately 33% of the synergies will be achieved in year one, with approximately 66% achieved in year two and 95% achieved in year three following the close of the transaction, all on a run-rate basis.

The combined company is expected to have pro forma 2023 combined revenues of approximately $28.2 billion and combined adjusted EBITDA of approximately $4.1 billion. It is also expected to be EPS accretive in the first year following the close of the transaction, reflecting synergies expected to be realized. The return on invested capital from the combination is expected to exceed IP’s weighted average cost of capital by the end of the third year following the close of the transaction.

The combination will be structured as an acquisition of DS Smith by IP and implemented in accordance with the rules of the code and English law. Andrew K. Silvernail will be CEO of the combined company, and Miles Roberts will be retained as a consultant to assist with integration matters.

The transaction is expected to close by the fourth quarter of 2024, subject to IP and DS Smith shareholder approval and customary closing conditions, including receipt of regulatory clearances in Europe and the U.S.

The primary listing will be on the New York Stock Exchange and a secondary listing on the London Stock Exchange, aiming to create greater liquidity for investors and a more diversified shareholder base.

The announcement does not include any disclaimers, terms and conditions, warnings, website links, sources, or contact information. As a result of these announcements, the company's shares have moved -1.9% on the market, and are now trading at a price of $36.05. For the full picture, make sure to review International Paper's 8-K report.

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