US paper giant bidding for DS Smith pledges to keep European HQ in London

The US paper giant’s bid for one of Britain’s biggest packaging companies has pledged to establish a European headquarters in London and list shares in the city.

After hijacking a proposed takeover of DS Smith by fellow FTSE 100 firm Mondi last week, International Paper made clear its plans if the £5.7bn takeover bid is successful.

The update came after the Mail revealed the Americans were seeking a secondary listing on the London Stock Exchange and planned to merge their European operations into DS Smith – founded in London in 1940 – in a bid to make the offering more attractive .

International Paper confirmed these reports yesterday, saying it ‘proposes to establish a European headquarters in London at the existing DS Smith headquarters’.

The Memphis-based company added that it would “pursue a secondary listing of its shares on the London Stock Exchange” in addition to the main New York listing.

The proposals are seen as an attempt to boost the odds in a bidding war with Mondi, whose plans would involve the combination of two FTSE 100 companies rather than the acquisition of one by a foreign rival.

A London stock exchange listing by International Paper would be a boost for the stock market amid an exodus of companies in what has been called a takeover fueling frenzy.

“The government has made a conscious effort to try to bring in more international companies while listing reforms are underway, so this would be seen as an important sign of progress,” said analyst Susannah Streeter of Hargreaves Lansdown.

The US giant last week offered to pay £5.7 billion for DS Smith, blowing an earlier £5.1 billion bid from Mondi out of the water.

But if the deal goes through, it would still mean another British company falling into foreign hands.

International Paper chairman Mark Sutton said combining the two companies is “a logical next step.”