Mondi considers acquisition of DS Smith in multi-billion-pound packaging industry merger

UK – The London-listed paper and packaging group Mondi is exploring the acquisition of its UK rival DS Smith in a deal that would create a more than £10.4 billion (US$12.63bn) industry heavyweight as the sector consolidates.

This proposed deal comes three years after Mondi reportedly considered an approach for its rival. DS Smith released a statement to investors.

It said: “The board of DS Smith notes the recent media speculation and confirms that it has received a highly preliminary expression of interest from Mondi plc regarding a combination with DS Smith.

“The board of DS Smith understands that Mondi is considering a possible offer for DS Smith although no proposal has been received at this stage. There can be no certainty as to whether any proposal will be made or the terms of any such proposal. A further announcement will be made if and when appropriate.”

The potential deal sent DS Smith shares soaring by up to 15% at one point. If successful, the merger would combine two packaging companies with a combined market value of around £10.4 billion.

Under UK takeover rules, Mondi now has until March 7 to “put up or shut up” — in other words, make a firm offer or walk away — unless the deadline is extended with the consent of both parties.

DS Smith traces its roots back to a box-making business started by the Smith family in East London in 1940.

It is one of the world’s largest cardboard box makers and produces packaging for everything from cereal boxes to Amazon parcels.

In another merger exploration in the packaging industry, Smurfit Kappa and WestRock, last year, confirmed an agreement to combine their businesses into a US$20 billion company.

Both companies’ Boards of Directors consented to the merger and are encouraging their shareholders to voice their own agreement, indicating financial benefits from their combination.

Irial Finan, Tony Smurfit, and Ken Bowles are named amongst the eight Smurfit Kappa Directors and six WestRock Directors that will form the Board of Smurfit WestRock.

With the combination scheduled to be completed in the second quarter of the 2024 calendar year – subject to customary closing conditions like shareholder and regulatory approvals – Smurfit WestRock’s common stockholders will receive one new share and US$5.00 in cash for each share of common stock.

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