International Paper advances on £5bn takeover bid for DS Smith

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DS Smith

In a significant development in the paper and packaging industry, US-based International Paper is reportedly close to announcing a formal offer for the acquisition of DS Smith, a FTSE-100 paper and packaging group.

International Paper and its advisers are hoping to reach an agreement on a recommended offer by the end of this week, although it is possible this could slip into next week to meet a 23 April deadline set by the Takeover Panel in the UK. 

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This move represents a key milestone in an unfolding takeover battle for one of Britain’s biggest industrial companies.

The American paper giant had previously hijacked a proposed takeover of DS Smith by fellow FTSE 100 firm Mondi. Now, International Paper has revealed its plans should its £5.7 billion takeover offer be successful.

International Paper has pledged to keep the DS Smith European headquarters in London, although the entire group would be based in Memphis, Tennessee. It also plans listing primarily in New York but also in London.

It is estimated that the combination of the companies would generate £375m of cost synergies. 

International Paper chairman and chief executive Mark Sutton said: “Bringing International Paper together with DS Smith is a logical next step in International Paper’s strategy to create value by strengthening our packaging businesses in North America and Europe. By combining the strengths of both companies, we believe we can enhance our offering of sustainable packaging solutions for customers in attractive and growing markets.”