DS Smith shares surge as International Paper's takeover offer threatens to spark bidding war

By Louis Goss

DS Smith shares surged 7% on Wednesday after Tennessee packaging company International Paper confirmed it had submitted a bid to fully-acquire the London company for GBP5.72 billion ($7.2 billion), in a counter-offer that threatens to drive a bidding war with its rival Mondi.

In a statement, International Paper confirmed it had offered to buy DS Smith for 415 pence per share, equivalent to a 48% premium on the London packaging firm's closing share price on Feb. 7, just before DS Smith first announced Mondi's plans to submit an offer on Feb. 8.

International Paper's offer now threatens to spark a bidding war with Anglo-Austrian company Mondi, which confirmed its offer to pay GBP5.14 billion for DS Smith in March, with a view to creating "a pan-European industry leader in paper-based sustainable packaging solutions."

Shares in DS Smith (UK:SMDS) increased 7% on Wednesday having advanced 26% in the year-to-date. Mondi (UK:MNDI) shares increased 1% on Wednesday having dropped 16% in the year so far. International Paper (IP) shares were up 1% in pre-market trading on Wednesday having risen 6% in 2024.

In a filing to the London Stock Exchange, International Paper said a takeover of DS Smith would see the creation of a "truly global leader in sustainable packaging solutions that is well positioned in attractive and growing markets."

International Paper had previously been the world's largest paper packaging company, before losing its leading position to its Irish rival Smurfit Kappa following its takeover of Atlanta company WestRock in a deal worth $11 billion last September.

The global packaging industry has seen its profits slump in recent years following a major boom during COVID-19 driven by a surge in the e-commerce sector. Inflation has increased the packaging industry's costs, leading to a search for greater efficiency.

First formed through the bringing together of 17 pulp and paper mills in 1898, International Paper currently employs around 39,000 people worldwide. FTSE-100 company DS Smith was first founded in London in 1940, before listing on the London Stock Exchange in 1950.

-Louis Goss

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03-27-24 0547ET

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