Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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The £15m trade was the end of day auction rather than a single trade, so I wouldn't read too much into that.
There were some chunky trades declared after the close though, just not quite THAT chunky !
£15m buy at 16:35:04
At least 17 other trades at or around £1m+
I don't think it is all about the cash equivalent, and whoever offers the more will take Smith DS. I believe Smith will have to ponder the long term advantages of working "synergistically" with one or the other company, Smith may still prefer to go with the lower offer from Mondi.
Re. International Paper: if the acquisition materializes it will be a blow to the LSE, in addition to Unilever which seems very likely to list the Ice Cream business in the Netherlands. I wonder what is going to be left on the LSE in a few years from now with the current ridiculous valuations.
I see it that if MNDI walk away their price will rise….I’m tempted to sell all my SMDS now and put into MNDI in the hope that will happen …I don’t want the shares in IP
Now that IP have joined the fray, SMDS is rising, as we might expect, but also so is MNDI. Can anyone explain the logic in that?
I'm trying to work out whether to hold or sell my remaining shares, having already sold 40% this morning. I'm tending towards sell on the following grounds: 1. I'm not sure Mondi can outbid IP's bid; 2. At 3.93 it's close to IP's bid already and I don't want shares in a US company; 3. It's not obvious who else might enter a bidding war; 4. If everyone walked away, as they did with Curry's, the shares could drop back to say 3 quid, so downside risk seems higher than upside. Any decent counter arguments?
Could be hassle havining a share quoted on nyse
Susssex does make the point however that IP trades on NYSE in a currency and a time frame which are different from ours.
The extra value is welcome but if this were to go to IP I think I would be tempted, as a consequence, to sell out and use the funds elsewhere.
“…their performance took a hit on the offer.”
Agreed. But/and in principle the impact on International’s share price is pricing out a proportion of the premium being offered. Acquirer shares invariably drop on announcement.
IMV rather than focusing on the “money” that isn’t changing hands, you need to view that you’re swapping an undervalued asset for another undervalued asset. The more interesting question is which of Mondi or International are more undervalued.
400p and I’m selling
We all have to be mindful that the offer is on a share offer basis. The offer was made on 1 DSS share equating to 0.1285 International Paper share, not £4.00 to £4.20. At the close of play (US) on 26/3/24 our offer has fallen to (38.20/40.85) x £4.15 = £3.88. It is important that we all keep an eye on the NYSE over the coming days and weeks on IP, as their performance took a hit on the offer.
https://www.reuters.com/markets/deals/uks-ds-smith-deal-talks-with-international-paper-2024-03-26/
You also need to account for currency fluctuations, which as of CoP on Monday 25/3/24 was £1 = USD1.264.
That’s more like it. 387p will force some more weak sellers out but at least the offer is not as derisory as MNDI’s bid. Getting interesting now.
My only concern is:
In accordance with Rule 2.5(a) of the U.K. Takeover Code, International Paper reserves the right to make an offer for DS Smith on less favourable terms than those set out in this announcement: (i) with the agreement or recommendation of the DS Smith Board; or (ii) if a third party announces (after the date of this announcement) a firm intention to make an offer or a possible offer for DS Smith which, at that date, is of a value less than the value implied by the Exchange Ratio. International Paper reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer.
I agree I can’t see Mondi being in a position to offer more. 415 is the number I have been talking about from the start. I’m going to sell half my stake and bank the profits, whilst letting the rest ride. There are still good synergies so it should strengthen both companies.
I can’t see this being much of a fight.
Mondi’s proposal gave Mondi owners 54% and DS Smith owners 46%. I can’t be bothered to do the maths right now, but matching or beating International Paper would effectively result in a reverse takeover - and likely decimate Mondi’s share price.
Mondi doesn’t appear to have enough market capitalisation to counter without moving to a share and cash basis - and taking on debt to do so.
International Paper’s offer gives a 75:25(ish) split and offers room for improvement given their higher market capitalisation.
Thoughts?
Mondi only have till 7th April to confirm their offer or walk away, and this afternoons announcement of the higher IP bid has put the proverbial cat among the pigeons.
It will be nice to sit on the sidelines and watch how the Mondi and IP face-off develops.
The ball is now firmly back in Mondi court.
This is exactly that I hoped for! Mondi tried to get DS on the cheap
This could be fun!
Based on International Paper's share price of $40.85 at close of business on 25 March 2024, the terms of the Proposal represent a value of 415 pence and premium of 48 per cent. to DS Smith's closing share price of 281 pence on 7 February 2024
A possible bidding war, then? Yes, please!
Sky reporting international paper is looking to put in a counter offer!
On the table now. Gla
In terms of the 1381/373 split, MNDI has now risen above that. Pity SMDS didn't keep pace; we would now be above 373 had it done so.
"Derisory? What do you expect them to offer?"
441p the average SP in 2021 would be a good for starters.
AbjectPerformer it is wrong to think about the merger in terms of equivalent cash offer. The "cash value" of your shares is determined by the % share of the merged company and its market value at any date consequent the merger. Mondi cannot guarantee you will get 375p or 400p once the merge is completed as Mondi has no control on the share price.
What you may argue is that you may want more than 46%, but that will require a thorough analysis that I believe is beyond your capability (it is insufficient to look at the financial statement, you will need to have the insight of a full board of managers assessing the benefit of merging operations).
I think at this point in time we could be quite happy if we trust the management and if we are happy to hold for some time and see how things go. If you are hoping to cash in 400p and run away and chase some other opportunity you are in for a gambling game, which it could turn out well for you, but it is not guaranteed.
A take over price of somewhere north of the 12 month high should be offered. Which in this case has happened.
However Ageas had been scared off from direct line last week as the 12 month high was opportunistic due to the geopolitical issues affecting ftse stocks over the last 4 years; Covid , war/inflation.
Therefore with shares inevitably on an upward trajectory and putting war behind them in the coming years an offer somewhere nearer to the high in 2021 of 450 would have been reasonable, which was 2.5 years ago.
Therefore I’d have thought an offer of 400p would have been reasonable and take most shareholders out of a loss inducing situation or a move to mondi.