DS Smith in talks with International Paper over all-share offer

London-based paperboard and packaging manufacturer DS Smith confirmed Tuesday, March 26, it is in discussions with International Paper (IP) over an all-stock offer that valued DS Smith at $7.22 billion (5.72 billion pounds).

Under the terms of the offer, DS Smith shareholders would receive 0.1285 shares in Memphis, Tennessee-based IP for each share they own in DS Smith, and the proposal represents a premium of 48 percent. If the proposal goes through, DS Smith shareholders will own 33.8 percent of the combined company.

“The board acknowledges the strategic merits and potential for value creation through a combination with International Paper," DS Smith tells Reuters. “Accordingly, the board is progressing its discussions with International Paper regarding the proposal.”

Earlier in March, DS Smith reached an agreement in principle with fellow British paper and packaging company Mondi for an all-share offer to buy DS Smith for roughly $6.5 billion (5.14 billion pounds). That offer represents a 33 percent premium compared with IP’s 48 percent.

The Mondi deal also would see its shareholders owning 54 percent of the combined company, while DS Smith shareholders would own the remaining 46 percent.

This is potentially the second merger of two major players in the paper and packaging sector in the last year.

In September 2023, Smurfit Kappa announced its intention to purchase WestRock in an $11.2 billion deal to create an industry giant known as Smurfit WestRock. At the time of the announcement, the companies had a combined adjusted annual revenue of about $34 million over the previous 12 months.

But in December, a London-based activist fund urged the Smurfit Kappa board of directors to reconsider the merger and explore “strategic alternatives”—most notably, a merger with IP.

Talks of a merger between IP and Smurfit Kappa first were on the table in 2018, but the Irish paper and packaging company rejected the bid to be sold to IP, noting “superior prospects as a standalone business.”

According to Bloomberg, which says these latest talks could trigger a possible bidding war, DS Smith is separately continuing talks with Mondi, which has until April 4 to announce plans to make a firm offer, while International Paper has until April 23.