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Well, the deal has been agreed in principle, key roles have been established and Smith ceo is
retiring. Why would it not complete. Why is the share price not near the recommended offer,
because we are in a bear market.
It’s obvious, even to an idiot . Even better news in that there is an extension to April, maybe
to dot the I’s and cross the t’s and flush out any other interest. Some people read too much
into scenarios and go off on a tangent of nonsense.
Something to think about
Seems Proactive are framing this as a 'done deal':
"The FTSE 100 has dropped 40 points lower after falls from Rentokil, Entain and Melrose continued to offset a 6% surge in DS Smith's shares.
DS Smith's jump comes after fellow packaging rival Mondi confirmed a takeover bid had been accepted, paving the way to create a £10 billion industry giant".
Sloppy reporting, or are we all missing something?
Jupiter, Why International Paper specifically?
Hi jupiter - I read somewhere recently that Amazon were keen to secure their own cardboard box supplier - maybe they're looking at this situation, too?
A cash deal would be 'small change' for them, after all - sasa.
Hi Trouts,
"We're actually at 346p. What does this suggest?"
To me it suggests 2 things. One that the market is factoring-in a possibility (if not a probability) that this won't actually happen. There could be sufficient shareholders on either side (SMDS, or MNDI) that vote against it to stop it happening - SMDS because the "deal" isn't high enough, and MNDI because it's giving too much of a premium to SMDS. The other is the "time value of money" - this whole process could take several weeks if not months. But there again, what do I know?
Whatever happens, ATB!
Mike.
So with MNDI currently sitting at 1356p as I write, SMDS should be priced at 366p (given the stated correlation between the offer price and proportions). We're actually at 346p. What does this suggest? The market doesn't believe this will actually happen? There are more risks to this going ahead?
Thoughts anyone?
I really hope International Paper come in here with a bid. Would they really want to be pushed into no 2 spot globally after the recent Smurfit/Westrock merger?
Feels like a really opportunistic bid taking advantage of market conditions by Mondi (as they know the long term value here) with not much pushback from Smds on price.
I own both SMDS and Mondi. A lot more of the former than the latter. Since the news broker, I'm well up on SMDS and about even with Mondi. Not sure what to do now to be honest! But so far the market doesn't seem to hate this from Mondi's perspective so just sitting tight.
I find two things about this somewhat odd:
The MNDI price kicked off this morning well down, but as you say is now picking up.
If you look on the MNDI chat board there is zero mention of any of this! It's as if they don't know, or maybe care, about what is happening. Oh well.
Thanks Oldfortyniner!
I think I'll be watching the Mondi price like a hawk this morning - it seems so far to be creeping upwards - 1,358p as I write.
Well put, Mike! It has to be so because the agreed ratio of ownership in the combined group has to be 54% Mondi 46% Smith.
Thanks johnychainlocker!
We can but hope!
Good post @MikeM
Dear all,
The relevant key sentence in yesterday's "joint" MNDI/SMDS RNS announcement seems pretty clear:-
"Based on Mondi's closing share price of 1,381 pence per share on 7 February 2024 (being the day prior to the commencement of the offer period), the terms of the Combination would represent an implied value of 373 pence per DS Smith share and a premium of 33 per cent. to DS Smith's closing share price of 281 pence per share on 7 February 2024 (being the day prior to the commencement of the offer period)".
So the SMDS price is now linked to the MNDI price, rather than to any cash figure.
Given that the MNDI price was about 1,344p when I started to type this, that puts SMDS at about 363p.
(373p x (1344/1381)).
However, the MNDI price has now risen a bit, to about 1,352p, which would put SMDS at about 365p.
I'm guessing that SMDS management would have consulted with a number of large shareholders before "agreeing in principle" the construct of the offer, and therefore MNDI don't have any incentive to increase the offer, unless another bidder comes in.
The MNDI share price would have to go above 1381p for the "implied value" of SMDS shares to go higher than 373p - what's the chance of that happening?
ATB, Mike.
Not sure SKG would be looking to digest another acquisition so soon after Westrock. I'm looking at International Paper as the biggest player in the market to hopefully make a move although there could be plenty of potential suitors as this market looks ripe for consolidation. GLA
https://www.elitecustomboxes.com/packaging-companies/
"Hopefully the bid will bring out some American money." I am not as experienced as many of you on here. But surely if the market was expecting counter bid the price would be higher but it has not even got to Mondis 373. Hope I am wrong in my thinking
Applying the same ratio to Mondi's December high of 1563 gives an equivalent of around 420pps - more like it, but not exactly generous ! Would like to see this higher but can't see it unless there is an increased or rival bid, or at least a credible rumour of one !
MMs playing with this to shake out weak sellers. I expect the SP to get to 373 at some point. Then we’ll wait and see if any other bidders weigh in. Maybe SKG can come on board? DYOR IMHO
Thats why we are missing another 15-18% on top of current 373p offer. That would put SP into my range of 400-450p which I have stated several times now.
"which is a premium of 33% to the closing share price on Thursday." Someone is not very good at arithmetic! It may be 33% premium to where SMDS were at the time of the initial interest, but only about 15% to yesterday's close.
(Sharecast News) - Packaging firm Mondi has agreed to buy smaller rival DS Smith for £5.1bn.
In a joint statement after the close on Thursday, the firms said the agreement in principle has an implied value of 373p per DS Smith share, which is a premium of 33% to the closing share price on Thursday.
The offer is not 373, it's Mondi shares worth 373 at the time of the offer. They are down over 3% this morning.
344p for me , ofer is 373p
Open around 349. Markets devaluing Mondi's shares or not sure it will happen
Bloomberg stated that Mondi was looking to up their offer... wth is that? 373p ?? So what was thei innitial offer? Did Mondi try lowball DS Smith business valuation? Better offer is required NOW