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(Alliance News) - International Paper Co is closing in on a formal GBP5 billion-plus bid for DS Smith PLC, the FTSE 100 paper and packaging group, Sky News reported on Monday.
Sky News said International Paper, the Tennessee-based pulp and paper supplier, and its advisers are hoping to reach an agreement on a recommended offer by the end of this week.
That would represent a key milestone in an unfolding takeover battle for one of Britain's biggest industrial companies, ahead of a deadline imposed by the City's Takeover Panel of April 23, Sky said.
https://news.sky.com/story/international-paper-closes-in-on-5bn-deal-for-london-listed-ds-smith-13110760
Citing City sources, Sky said that both International Paper and DS Smith were working towards an announcement before this weekend, although they acknowledged that it could slip into next week, depending upon the progress of talks.
A recommended offer from the US-based predator would still leave the door ajar for Mondi PLC, DS Smith's London-listed rival, to trump the International Paper bid, Sky said.
Both International Paper and Mondi have made all-share bid propositions for DS Smith.
International Paper's proposal offered 0.128 of its own shares for every share in DS Smith, valuing the company's shares at around 415p each. The move by International Paper came after DS Smith agreed merger terms with Mondi PLC, which valued DS Smith shares at 373 pence each.
Last Thursday, International Paper said a merger with DS Smith PLC could generate cost savings of more than GBP400 million should a deal proceed.
It estimated pre-tax cash synergies on an annual run-rate basis by the end of the fourth year following completion of the deal of at least USD514 million, around GBP407 million.
Around 47% of these would come from operational synergies across the combined network of mills, box plants and global supply chain.
A further 23% would come from overhead synergies by reducing duplicative corporate and business overhead expenses; with another 23% from operational procurement synergies from increased scale of the combined group.
Around 5% would result from capex procurement synergies and 3% from revenue synergies.
Shares in DS Smith fell 0.3% to 408.60 pence each in London on Monday afternoon, while Mondi rose 0.2% to 1,401.00p in London and fell 0.1% to ZAR328.87 each in Johannesburg.
By Jeremy Cutler, Alliance News reporter
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