Yahoo Finance International Paper (IP) Moves Closer to Acquiring DS Smith
International Paper Company IP has cleared a milestone in its acquisition process for DS Smith DITHF, with the expiration of the mandatory 30-day waiting period under the Hart-Scott-Rodino Act. This brings the companies closer to finalizing the deal, which will strengthen IP’s corrugated packaging business in Europe and prioritize sustainable packaging. The buyout is expected to be accretive to IP’s earnings in the first year of closure and provide at least $514 million of pre-tax cash synergies on an annual run-rate basis by the end of the fourth year following the close.
The combination, which remains subject to the fulfillment of remaining conditions including regulatory clearance from the European Commission and the court’s sanction, is expected to close by the fourth quarter of 2024.
On Apr 16, 2024, International Paper announced that it had inked a deal to acquire the entire issued share capital of DS Smith. The offer valued DS Smith's entire issued and to-be-issued share capital at around £5.8 billion ($7.4 billion) on a fully diluted basis and the company’s enterprise value at approximately £7.8 billion ($9.9 billion).
Per the terms of the deal, DS Smith shareholders would receive 0.1285 shares in International Paper for each DS Smith share held. This will result in DS Smith shareholders owning approximately 33.7% of the combined entity and the remaining 66.3% will be held by International Paper’s shareholders.
DS Smith is a leading provider of sustainable packaging solutions, paper products and recycling services worldwide. It has a workforce of around 30,000 people in more than 30 countries. The combination of International Paper and DS Smith will establish a global leader in sustainable packaging solutions that is well-positioned in attractive and growing markets. It will have a significantly stronger corrugated packaging business in Europe and enhanced customer offerings.
The combined company will have pro forma integrated revenues of approximately $28.2 billion and a combined adjusted EBITDA of approximately $4.1 billion.
The combination will create the opportunity to integrate both the companies’ mill and box networks and optimize the supply chains in Europe and the United States. It will leverage the market expertise of two experienced and innovative management teams to enhance innovation, solutions and sustainability products for customers.
The merger is expected to drive significant synergies, including higher integration, commercial and operational improvements, and economies of scale across sourcing, supply chain and administration.
In addition to the IP-DITHF combination, another noteworthy merger in the Paper and Related Products industry that is making headlines is of WestRock Company WRK and Smurfit Kappa Group Plc SMFKY. The deal has been recently approved by both the company’s shareholders. Subject to the clearing of a few other customary closing conditions, it is expected to close in July.
On Sep 13, 2023, WestRock and Smurfit Kappa Group announced that they have agreed to merge and create Smurfit WestRock, which is expected to be one of the world’s largest paper and packaging companies with a worth of around $20 billion. Smurfit WestRock will have an unmatched geographic reach spanning 42 countries.
Given this scale and equipped with WRK and SMFKY’s highly complementary portfolios and innovative sustainability capabilities, the merged entity is likely to be the preferred packaging partner for companies and customers across the globe. It is projected to result in annual pre-tax run-rate cost synergies of more than $400 million in the first year following its completion. WestRock and Smurfit Kappa’s combined last 12 months’ revenues and adjusted EBITDA were around $34 billion and $5.5 billion, respectively (as of 30 Jun 2023).
Price Performance & Zacks Rank
International Paper’s shares have gained 49.2% in the past year compared with the industry’s 37% growth.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
International Paper Company (IP) : Free Stock Analysis Report
WestRock Company (WRK) : Free Stock Analysis Report
Smurfit Kappa (SMFKY) : Free Stock Analysis Report
D S SMITH (DITHF) : Free Stock Analysis Report
