UK – Mondi, a UK-based packaging company, has reached an agreement in principle for a potential all-share offer to acquire its rival, DS Smith, for £5.14 billion (US$6.57 billion).

This development follows Mondi’s confirmation last month of considering an all-share offer for DS Smith. If successful, this deal would create a packaging giant with a market value exceeding £10 billion, as reported by Reuters.

Under the agreement, Mondi shareholders would own 54% of the combined entity’s issued and to-be-issued share capital, with DS Smith shareholders owning the remaining 46%.

The offer implies a value of £3.73 per DS Smith share, representing a significant 33% premium over the share price on 7 February 2024, the day before Mondi disclosed its initial approach.

Shareholders of both companies stand to benefit from increased exposure to sustainable packaging growth trends and a combined geographic footprint that would establish a dominant position in Europe’s corrugated packaging sector.

The merger aims to leverage Mondi’s and DS Smith’s strengths across the corrugated value chain, including cost-efficient containerboard mills, a leading converting network, and strategically located recycled containerboard production facilities.

In a joint statement, the companies emphasized the exciting opportunity to create a pan-European industry leader in paper-based sustainable packaging solutions.

They highlighted complementary geographic footprints, leading customer relationships, a strong balance sheet, and potential benefits for shareholders, customers, employees, and stakeholders.

The progression of the merger is contingent upon reaching agreements on other terms and conditions, including regulatory matters and completion of mutual confirmatory due diligence to the satisfaction of both companies.

Mondi’s CEO Andrew King and CFO Mike Powell are expected to continue leading the combined group, with three non-executive directors from DS Smith joining the Mondi Group board.

As per UK acquisition regulations, Mondi had until 7 March 2024 to formalize an offer for DS Smith or withdraw. However, with the agreement in principle now established, the deadline has been extended to 4 April this year for the official finalization of the offer.

Mondi’s sustainable stretch wrap earns prestigious innovation award

In other development, Mondi’s pioneering sustainable packaging solution, Advantage StretchWrap, has clinched the Fastmarkets PPI Product Innovation Award, marking a significant achievement for the company.

This innovative paper-based alternative replaces conventional plastic stretch wrap commonly used for securing pallets during transportation.

The Fastmarkets PPI Awards, recognizing excellence in the pulp and paper industry, showcased Mondi’s dedication to developing sustainable alternatives to traditional packaging materials.

The recent award ceremony, held on March 5, 2024, in Istanbul, Turkey, underscored Mondi’s ongoing commitment to innovation and sustainability.

Bartosz Babicz, Mondi’s Product Manager for Advantage StretchWrap, expressed pride in the team’s achievement, emphasizing the company’s relentless pursuit of sustainable packaging solutions.

Winning the award for the second consecutive year highlights Mondi’s dedication to making a positive impact on the environment while maintaining high standards of innovation and excellence.

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