- International Paper is one of the largest suppliers of paper and pulp in the world.
- DS Smith first received an offer from the Tennessee-based group last month.
Packaging giant DS Smith has agreed to be acquired by US rival International Paper in a £5.8bn deal.
The two companies said the alliance would help create a major sustainable packaging company in Europe and North America and “optimize” their factory networks, supply chains and transportation costs.
Bosses at International Paper, one of the world’s largest paper and pulp suppliers, also believe the acquisition would produce at least $514m (£413m) in cost synergies within four years.
Taking advantage: Packaging giant DS Smith agreed to be acquired by US rival International Paper in £5.8bn deal
DS Smith first received an offer from the Tennessee-based group last month, just weeks after it accepted a £5.1bn offer from British packaging company Mondi.
According to International Paper’s proposal, DS Smith shares are valued at £4.15 each, representing a 47 per cent premium to their closing price of £2.81 on February 7.
If fully approved, DS Smith investors will own around a third of the expanded business, while International Paper shareholders will control the other two-thirds.
Mark S. Sutton, president and CEO of International Paper, said the acquisition was “the next logical step” in his company’s strategy to “drive profitable growth.”
He added: “DS Smith is a leader in packaging solutions with a broad reach across Europe, which complements International Paper’s capabilities and will accelerate growth through innovation and sustainability.”
Founded in 1940 by two cousins, DS Smith supplies packaging to retail giants such as Amazon, Zalando, Tesco, Cadbury owner Mondelez and appliance maker Philips.
The FTSE 100 group employs around 30,000 people in more than 30 countries, including 4,750 in the UK.
Since 2020, the company’s growth has been fueled by a Covid-induced online shopping boom and higher retail prices for boxes, paper and recycling.
Its acquisition represents another potential blow to UK markets, which have lost several high-profile names to foreign buyers in recent years, including Morrisons, G4S, Hotel Chocolat and Ted Baker.
Analysts have largely blamed this trend on the pound’s weakness since the European Union referendum and a perceived undervaluation of UK-listed shares.
However, International Paper said it plans to carry out a secondary listing of its shares on the London Stock Exchange and establish a European headquarters at DS Smith’s headquarters in the UK capital.
Danni Hewson, head of financial analysis at AJ Bell, said the move was a “positive step and good for the reputation of the UK stock market as a US company sees value in having a presence in London, although this type of listing means it does not qualify for the FTSE 100.
“International Paper might also have considered that offering UK-listed shares would help the acquisition go through.”
DS Smith Stock They were 3.7 per cent lower at 394.6p on Tuesday afternoon.