International Paper Acquires Packaging Firm DS Smith; Eyes Secondary Listing On London Stock Exchange

International Paper Company IP has agreed to acquire all the shares of DS Smith Plc DITHF, implying a transaction value of approximately $9.9 billion.

The terms of the combination value each DS Smith share at 415 pence per share, and will result in IP issuing 0.1285 shares for each DS Smith share.

The arrangement will result in the ownership of 66.3% of IP shareholders and 33.7% of DS Smith shareholders.

The transaction is expected to close by the fourth quarter of 2024. DS Smith has also recently received a proposal from Mondi Plc MONDY.

“Combining with DS Smith is a logical next step in IP’s strategy to drive profitable growth by strengthening our global packaging business,” said IP Chairman and CEO Mark S. Sutton.

“DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements IP’s capabilities and will accelerate growth through innovation and sustainability."

The acquisition establishes a differentiated corrugated packaging company with approximately 90% of revenue from sustainable fiber-based packaging. It will combine DS Smith’s European sales of $9.4 billion in FY23 with IP’s European sales of $1.5 billion in FY23.

The transaction is expected to deliver at least $514 million of pre-tax cash synergies on an annual run-rate basis by the end of the fourth year after the completion.

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 combined company will be headquartered in Memphis, Tennessee, with plans to establish an EMEA headquarters at DS Smith’s existing London headquarters.

Upon completion of the combination, any new IP Shares issued to DS Smith shareholders will be authorized for primary listing on the NYSE, subject to official notice of issuance. IP also intends to seek a secondary listing of its shares on the London Stock Exchange.

International Paper held $1.1 billion in cash and equivalents as of December 31, 2023.

Price Action: IP shares closed lower by 1.00% at $36.77 on Monday.

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