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(Alliance News) - DS Smith PLC on Tuesday confirmed that it is in discussions with International Paper Co, regarding a possible all share takeover offer.
Under the terms of the proposal, DS Smith shareholders would receive 0.1285 shares in International Paper for each share they own in DS Smith, resulting in DS Smith shareholders owning approximately 33.8% of the combined International Paper-DS Smith group.
Based on International Paper's share price of USD40.85 at close of business on Monday, the terms of the proposal represent a value of 415 pence and premium of 48% to DS Smith's closing share price of 281 pence on February 7.
On February 8, DS Smith said it had received a "highly preliminary expression of interest" from packaging industry peer Mondi PLC about a possible merger, which would create company worth more than GBP10 billion.
Both companies are FTSE 100 constituents.
As far back as early 2021, Bloomberg had reported that Mondi was considering a tilt at DS Smith, citing at the time "people familiar with the matter". Nothing came of it at that time.
On Tuesday, DS Smith said: "The board acknowledges the strategic merits and potential for value creation through a combination with International Paper. Accordingly, the board is progressing its discussions with International Paper regarding the proposal. There can be no certainty as to whether any offer will be made by International Paper or the terms of any such offer from International Paper."
Shares in DS Smith closed 2.5% higher at 359.80 pence each in London on Tuesday. International Paper shares were down 5.0% to USD38.68.
By Sophie Rose, Alliance News senior reporter
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