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DS Smith, the UK packaging specialist, has agreed a takeover by US rival International Paper that values it at £5.8bn.
The all-share deal on the table, which was first reported by Sky News, would see DS Smith shareholders own just over a third of the combined firm.
The FTSE 100 company would not disappear from the London Stock Exchange altogether as the larger group would plan to seek a secondary listing in the UK.
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The proposed deal was announced ahead of a deadline for offers imposed by the City’s Takeover Panel of 23 April.
UK firm Mondi had been among the other potential suitors. Its all-share offer had valued DS Smith at just over £5.1bn.
It still has time to make a counter bid but DS Smith said International Paper was in a position to proceed, adding that it would recommend shareholders back the deal on the table.
Subject to that and regulatory approval, it would expect to close late this year.
The value placed on DS Smith represents a 47.7% premium to the closing price of its shares in February before Mondi’s initial interest came to light.
As part of its plans, International Paper said about 400 roles across the combined company could be at risk, but it added that any layoffs would be subject to review.
Mark S. Sutton, chairman and CEO of International Paper, said of the planned deal: “Combining with DS Smith is a logical next step in International Paper’s strategy to drive profitable growth by strengthening our global packaging business.”
DS Smith shares fell by 2%.
Its long-serving chief executive Miles Roberts, who had already announced plans to retire, added: “The combination with International Paper is an attractive opportunity to create a truly international sustainable packaging solutions leader that is well positioned in attractive and growing markets across Europe and North America.
“It combines two focused and complementary businesses.
DS Smith has grown significantly through a dedication to customers, focus on innovation, quality of packaging and high levels of service. In a dynamic sustainable packaging landscape, the combination will enhance our global proposition to customers, create opportunities for colleagues and drive value for shareholders who can remain fully invested in such an exciting business.”
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