Packaging: US giant International Paper offers £5.8bn to acquire DS Smith

US group International Paper said Tuesday, April 16, it has agreed to buy UK peer DS Smith for £5.8 billion ($7.2 billion or EUR 6.8 billion) to create a global giant after topping a proposal from rival Mondi.

"The boards of International Paper Company and DS Smith Plc are pleased to announce that they have reached agreement on the terms of a recommended all-share combination of International Paper with DS Smith," the pair said in a statement.

The deal for DS Smith is higher than a £5.1-billion informal bid made last month by fellow London-listed competitor Mondi.

"The combination will bring together complementary businesses to create a truly global sustainable packaging solutions leader, with industry leading positions in two of the most attractive geographies of Europe and North America," the statement added.

International Paper will own 66.3 percent of the new company, and DS Smith the remainder. New York-listed International Paper said it would seek a secondary listing in London as the group pursues expansion.

The transaction, which remains subject to regulatory and shareholder approval, is expected to complete in the fourth quarter.

"Combining with DS Smith is a logical next step in International Paper’s strategy to drive profitable growth by strengthening our global packaging business," said Mark S. Sutton, chairman and chief executive of the US firm. "DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements International Paper’s capabilities and will accelerate growth through innovation and sustainability," he said.

DS Smith operates in 34 countries employing around 30,000 people. Headquartered in Memphis, Tennessee, International paper employs approximately 40,000 staffs globally. The combined company will be headquartered in Memphis, Tennessee, with plans to establish EMEA headquarters at DS Smith’s existing London premises.

This operation marks the latest consolidation in the paper and packaging sector, after Smurfit Kappa announced in September that it planned to merge with WestRock, also aiming for a stronger international presence.