IP expects synergies of more than $500m from possible merger with DS Smith

5 April 2024

The battle for British paper and packaging company DS Smith has entered the next round. While DS Smith and Mondi have applied for an 
extension of the PUSU period to 23 April, competing bidder International Paper (IP) is also reporting making progress.

The company stated it continued to consider to make an offer for DS Smith and believes an acquisition of DS Smith is aligned with International Paper's strategy to enhance its corrugated packaging business in Europe and would create significant value for both DS Smith and International Paper shareholders.

International Paper expects that the Combination would generate significant synergies and drive compelling value creation for DS Smith and International Paper shareholders. The combined International Paper and DS Smith group could deliver at least $514m of pre-tax cash synergies on an annual run-rate basis by the end of the fourth year following completion of the acquisition. These synergies would be derived from operational synergies across the combined network of mills, box plants and global supply chain. IP anticipates that the total costs to achieve the synergies outlined above would be approximately $370m.

After finalising of the acquisition, International Paper envisages that DS Smith's North American manufacturing locations and International Paper's European manufacturing locations would continue their respective operations. Though it is intended that the combined group would be headquartered in Memphis, Tennessee, European headquarters would be maintained in London.

International Paper is required, by not later than 5.00 p.m. GMT on 23 April 2024, to either announce a firm intention to make an offer for DS Smith or announce that it does not intend to make an offer  – which is exactly the same as the new deadline for the Mondi offer.

Source: Euwid