Directors back Mondi-DS Smith deal

A major merger in the European paper and packaging industry has moved a step closer with the proposal being backed by the boards of both Mondi and DS Smith.

In early February, Mondi announced a ‘highly preliminary expression of interest’ that sparked a 13% jump in DS Smith shares. It said the £5 billion (EUR 5.8 billion) deal was an ‘exciting opportunity’ to become Europe’s leader in sustainable packaging.

Now both boards have announced agreement in principle for Mondi to acquire DS Smith shares. The UK’s takeover regulator has given Mondi until 4 April to finalise the offer.

Among the key terms for a combined operation, Mondi shareholders would own 54% cent and DS Smith shareholders 46% of the Mondi share capital. It represents an implied value of 373 pence per DS Smith share and a premium of 33% on the share price the day before the Mondi approach.

Key benefits

Key benefits include ‘increased exposure to structural growth trends in sustainable packaging’; a ‘highly complementary’ geographic footprint creating a leading player in corrugated packaging across Europe; and a portfolio of products to spearhead the shift towards a more circular and sustainable economy.