IP sees at least $514 mln of pre-tax cost savings
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DS Smith shares rise 1.3%; IP shares up 1%
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IP and Mondi have until April 23 to make a firm offer
April 4 (Reuters) - International Paper said it would seek a secondary London listing as part of its $7 billion plan to buy British packaging peer DS Smith, as the U.S firm prepares to tussle with rival UK suitor Mondi in a potential bidding war.
A London listing of the company, which has a standalone market value of about $13.53 billion, would be a boost for the British bourse, which has seen several firms leave the index, partly due to strategic and take-private deals.
"The government has made conscious efforts to attempt to woo more international firms to London, with listing reforms ongoing, so it would be notched up as a significant sign of progress," Hargreaves Lansdown analyst Susannah Streeter told Reuters.
International Paper last month made a proposal that valued the UK firm at 5.72 billion pounds ($7.24 billion), higher than the 5.14 billion pound deal that DS Smith agreed in principle with Mondi in early March.
The U.S.-listed paper company has yet to make a firm offer for DS Smith. Both the bidders have until April 23 to make a firm offer or walk away.
International Paper said "significant progress has been made" in due diligence, as it proposes to also establish a European headquarters in London.
Shares in DS Smith were up 1.3% by 1333 GMT, and earlier hit their highest level since September 2021 at 414.8 pence. International Paper rose about 1%.
The U.S. company said the combination with DS Smith could deliver at least $514 million of pre-tax cost savings on an annual basis.
Mondi has yet to quantify the expected synergies of a deal. Analysts at Barclays estimate them at about $280 million.
DS Smith said on Tuesday discussions with Mondi, which had been due to make a firm offer by Thursday, were continuing as the takeover regulator granted its request to extend Mondi's deadline.
Smith (DS) (SMDS)
Mondi (MNDI)