International Paper signs agreement to acquire DS Smith for US$9.74B

UK – International Paper has struck a deal to acquire its UK rival, DS Smith, in a landmark £7.8 billion (US$9.74bn) agreement, outbidding Mondi and marking a significant move in the ongoing consolidation within the paper and packaging industry.

DS Smith’s board has recommended that its shareholders accept International Paper’s offer of 415p per share, which is headquartered in Memphis, Tennessee, and listed in New York.

This all-share transaction comes shortly after International Paper intervened in DS Smith’s existing deal with Mondi, whose offer valued DS Smith at approximately £6.2 billion (US$7.74bn), including debt.

Should DS Smith shareholders approve the acquisition, they would collectively hold around a third of the merged entity, with International Paper investors owning the remainder.

DS Smith’s CEO, Miles Roberts, views the merger as an opportunity to establish a globally prominent and sustainable packaging solutions leader with a strong presence in European and North American markets.

The competitive landscape for DS Smith reflects the industry’s pandemic-driven boom in parcel deliveries, followed by a subsequent normalization and persistent cost pressures.

As part of the agreement, International Paper plans to pursue a secondary listing of its shares on the London Stock Exchange. Moreover, DS Smith’s directors have committed to supporting the transaction.

Mark Sutton, Chair and CEO of International Paper sees the acquisition as a strategic move to bolster the company’s global packaging business and drive profitable growth.

With approximately 39,000 employees and net sales of about US$18.9bn last year, International Paper had unsuccessfully attempted to acquire Smurfit Kappa in 2018.

The offer from International Paper represents a substantial 48% premium to DS Smith’s share value before news of the Mondi approach surfaced on February 7.

This acquisition follows a trend in the industry reminiscent of the Smurfit Kappa and Westrock merger last year. It signals a broader consolidation drive aimed at creating larger, more competitive entities in the sector.

The deal combines Europe’s biggest paper and packaging producer with the second-largest player in the United States, forging a company worth nearly US$20 billion.

Following the deal’s completion, Smurfit WestRock will be domiciled in low-tax Ireland, with its global headquarters in Dublin. It will be listed in New York and have a standard listing on the London Stock Exchange.

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