DS Smith’s Share Price Rallied 7.93% on International Paper’s Bid

The DS Smith plc (LON: SMDS) share price rallied 7.93% after responding to media speculation and confirming that it was in discussions with International Paper Company about a potential acquisition offer comprised entirely of shares.

According to the discussed terms, DS Smith's investors would be entitled to 0.1285 of an International Paper share for each DS Smith share, granting them an ownership stake of roughly 33.8% in the merged entity of International Paper and DS Smith. 

The offer's value is pegged at 415 pence per DS Smith share, based on International Paper's closing share price of $40.85 on March 25, 2024. This valuation represents a 48% premium over DS Smith's closing price of 281 pence on February 7, 2024, the day before the offer period started.

The Board has expressed optimism about the strategic and value-generation prospects of merging with International Paper and is actively continuing discussions regarding the proposal. However, it has also stated that there is no guarantee that International Paper will make a formal offer or the terms of any potential offer.

As mandated by Rule 2.6(a) of the Code, International Paper has a deadline of 5.00 p.m. on April 23, 2024, to either declare its intention to formally propose an offer for DS Smith in compliance with Rule 2.7 of the Code or to state its decision against making an offer, which would then be governed by Rule 2.8 of the Code. The deadline may be extended with the approval of the Panel, as per Rule 2.6(c) of the Code.

Following a previous announcement on March 7, 2024, DS Smith is also in parallel discussions with Mondi plc about a potential all-share acquisition offer from Mondi for DS Smith.

According to Rule 2.6(c) of the Code, Mondi is obligated to either announce a definitive intention to bid for DS Smith by 5.00 p.m. on April 4, 2024, in line with Rule 2.7 of the Code, or declare its decision not to pursue an offer for DS Smith, thereby invoking Rule 2.8 of the Code. Like the International Paper deadline, Mondi's deadline may also be extended with the Panel's consent according to Rule 2.6(c) of the Code.

DS Smith share price. 

The DS Smith share price rallied 7.93% to trade at 388.35p from Tuesday’s closing price of 359.80p.