The tussle for UK packaging firm DS Smith (LSE: SMDS) took another turn on Tuesday as International Paper Co submitted its own takeover proposal. The all-share offer values the London-based DS Smith at approximately £5.8 billion on a fully diluted basis, with an enterprise value around £7.8 billion.
Under the terms, DS Smith shareholders would receive 0.1285 newly issued International Paper shares for each DS Smith share held. This caused DS Smith’s share price to fall 2.4% in Tuesday’s trading session.
The proposed deal would see DS Smith shareholders owning around 34% of the combined entity, with US-based International Paper holding the remaining 66% stake. Both companies stated there is a “compelling strategic and financial rationale” for the combination.
Geoff Drabble, DS Smith’s Chair, stated the Board views the International Paper combination as “attractive value” and “a strong investment proposition” for shareholders in global sustainable packaging.
International Paper’s move follows DS Smith having previously agreed merger terms with Mondi which valued its shares at 373 pence each. Mondi has not yet publicly commented on its intentions amid International Paper’s agreed bid for DS Smith.
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