International Paper: Acquisition of DS Smith Creates Another Global Containerboard Giant

International Paper announced on April 16 that it had reached an agreement to acquire DS Smith, one of the largest corrugated packaging producers in Europe. This news comes a few weeks after International Paper made its initial offer to acquire DS Smith, which was valued at $7.22 billion in an all-stock deal. The deal will have International Paper issue 0.1285 shares for each share of DS Smith at a value of GBX 415 per share, which would result in 66.3% ownership for International Paper shareholders and 33.7% ownership for DS Smith shareholders. Barring any issues, management expects the deal to close in the fourth quarter of 2024. The geographic diversity of International Paper and DS Smith’s operations give us greater confidence that the deal will receive the necessary regulatory approvals. That said, we think synergies will be limited as regional overlap generally drives synergies in containerboard-related deals. We think the deal is largely value neutral, and as such, we are maintaining our $41 per share fair value estimate.