International Paper acquires packaging company DS Smith; Eyes Secondary Listing on the London Stock Exchange – International Paper (NYSE:IP)

International paper company IP agreed to acquire all shares of DS Smith Plc DITHFimplying a transaction value of approximately $9.9 billion.

The terms of the combination value each share in DS Smith at 415 pence per share and will result in IP issuing 0.1285 shares for each share in DS Smith.

The deal will result in ownership of 66.3% of IP shareholders and 33.7% of DS Smith shareholders.

The transaction is expected to close by the fourth quarter of 2024. DS Smith also recently received a proposal from Worlds Plc WORLDS.

“Combining with DS Smith is the logical next step in IP’s strategy to drive profitable growth by strengthening our global packaging business,” said Mark S. Sutton, IP president and chief executive officer.

“DS Smith is a leader in packaging solutions with a broad reach across Europe, which complements IP capabilities and will accelerate growth through innovation and sustainability.”

The acquisition establishes a differentiated corrugated packaging company with approximately 90% of revenues from sustainable fiber-based packaging. It will combine DS Smith’s European sales of $9.4 billion in FY23 with European IP sales of $1.5 billion in FY23.

The transaction is expected to generate at least $514 million in pre-tax cash synergies on an annualized basis by the end of the fourth year following completion.

Andrew K. Silvernail will serve as chief executive officer of the combined company and Miles Roberts will be retained as a consultant to assist with integration matters.

The combined company will be headquartered in Memphis, Tennessee, and plans to establish an EMEA headquarters at DS Smith’s current London headquarters.

Upon completion of the Combination, all new IP Shares issued to DS Smith shareholders will be authorized for primary listing on the NYSE, subject to official notice of issuance. IP also intends to seek a secondary listing of its shares on the London Stock Exchange.

International Paper held $1.1 billion in cash and cash equivalents as of December 31, 2023.

Price action: IP shares closed 1.00% lower at $36.77 on Monday.

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