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(Alliance News) - Mondi PLC and its packaging peer DS Smith PLC have reached an agreement in principle that will see Mondi take over DS Smith in a proposed all-share deal.
In a statement dated Thursday, but was released on Friday, Mondi said the possible merger that would create a company worth more than GBP10 billion is subject to regulatory clearance and mutual confirmatory due diligence.
In terms of the agreement, Mondi shareholders would own 54%, while their DS Smith counterparts would hold 46%.
Based on Mondi's closing share price of 1,381 pence on February 7, the day before Mondi launched its takeover bid, the terms of the combination would represent an implied value of 373 pence per DS Smith share and a premium of 33% to DS Smith's closing share price of 281 pence per share on February 7.
The panel on takeovers & mergers had extended the deadline to enable the parties to continue their discussions on the merger. Mondi has until April 4 to make a firm offer for DS Smith. The due date was originally March 7.
Mondi first talked up the idea of a possible bid for DS Smith on February 8.
If the deal succeeds, Mondi Chair Philip Yea will keep the same role in the combined entity, Mondi Chief Executive Officer will retain the same post and Mondi Chief Financial Officer Mike Powell will retail a similar position.
Three Non-Executive Directors of DS Smith are expected to join the enlarged Mondi board.
Bloomberg reported on Friday that Mondi had increased its takeover proposal for DS Smith, citing people with knowledge of the matter. DS Smith still saw that bid as insufficient, however, Bloomberg reported.
In reaching agreement in principle on the key terms, Mondi said both boards have taken into account the "substantial" synergies which they believe would arise from combining the two pan-European companies.
Mondi said the merger is an exciting opportunity to create a pan-European industry leader in paper-based sustainable packaging solutions.
By Artwell Dlamini, Alliance News reporter
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