International Paper agrees to acquire DS Smith Plc in $9.9bn all-share transaction

International Paper (NYSE: IP), a global leader in packaging and paper products, has announced a definitive agreement to acquire DS Smith Plc (LSE: SMDS), a prominent UK-based manufacturer of sustainable corrugated packaging, in a deal valued at approximately $9.9 billion, including assumed net debt. The all-share transaction will see International Paper’s shareholders owning 66.3% and DS Smith’s shareholders owning 33.7% of the merged entity.

Under the terms of the agreement, DS Smith shareholders will receive 415 pence per share, and International Paper will issue 0.1285 shares for each DS Smith share. This transaction is projected to close by the fourth quarter of 2024, pending approval from both sets of shareholders and regulatory clearances in Europe and the U.S.

The merger is poised to create a global powerhouse in the sustainable packaging industry, particularly strengthening the combined company’s position in North America and Europe. International Paper’s Chairman and CEO, Mark S. Sutton, stated, “Combining with DS Smith is a logical next step in IP’s strategy to drive profitable growth by strengthening our global packaging business.” The merger aims to enhance the company’s product offerings and reach, driving significant value for stakeholders and expanding its sustainable packaging solutions.

The combination is expected to generate substantial financial benefits, including at least $514 million of pre-tax cash synergies annually by the fourth year post-closing. These synergies are anticipated from operational efficiencies, reduced overhead expenses, and procurement advantages due to increased scale. The deal is also expected to be accretive to International Paper’s earnings per share in the first year following completion.

Post-merger, Andrew K. Silvernail, currently CEO-Elect of International Paper, will lead the combined entity, with Miles Roberts, CEO of DS Smith, serving as a consultant to ensure a smooth integration. The headquarters of the combined company will be in Memphis, Tennessee, with an additional EMEA headquarters at DS Smith’s current London location.

This merger represents a transformative step for International Paper, positioning it to better compete in the rapidly evolving sustainable packaging market. By integrating DS Smith’s renowned innovation in corrugated packaging and its strong European presence, International Paper will significantly enhance its global reach and capabilities. The strategic focus on sustainable, fiber-based packaging aligns with consumer preferences and regulatory trends favoring environmentally friendly products. The combined expertise and resources of both companies are likely to drive innovation, operational excellence, and shareholder value in the competitive packaging industry.