DS Smith agrees £5.8bn takeover by US suitor

UK packaging giant DS Smith has agreed a £5.8 billion takeover by a US rival after the suitor emerged victorious in a bidding battle for the firm.

Under the all-share deal, Memphis-based International Paper will own around 66.3% of the combined group, with FTSE 100 listed DS Smith owning the remaining 33.7%.

It comes after International Paper muscled in on a £5.1 billion deal between DS Smith and London-listed rival Mondi, that was agreed in principle last month.

International Paper will also seek a secondary listing of its shares on the London Stock Exchange following the takeover, which values each DS Smith share at 415p.

But it warned over back office job cuts across the combined workforce, with around 400 roles so far earmarked as being at risk, though this is subject to a review.

It said this was around 0.6% of the combined workforce worldwide and would focus on “corporate, head office and senior management positions across its and DS Smith’s respective businesses”.

Most roles impacted would be across corporate and administrative departments and come as part of aims to save at least £413 million in “synergies” after the acquisition.

The firms did not say how many jobs were likely to go in the UK or specifically across DS Smith’s operations.

International Paper said: “Aside from any potential headcount reduction resulting from the review… International Paper does not intend that the combination will result in substantial additional job losses – including in frontline operational roles – or mill or plant closures.”

DS Smith has 4,750 staff in the UK and 30,000 worldwide, while International Paper has about 40,000 employees globally, of which 33,000 are based in the US.

International Paper said the enlarged company would be headquartered in its existing Memphis office, though it will keep “key elements” of DS Smith’s headquarters, with plans to base its European HQ at the London site.

The combined group will be headed up by International Paper’s incoming chief executive, Andrew Silvernail, with the rest of the US firm’s leadership team largely remaining in place.

DS Smith’s chief executive, Miles Roberts, will stay on in a consultancy capacity for up to two years after the deal.

Mr Roberts, said: “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.”

Mr Silvernail added: “Bringing together the capabilities and expertise of both companies will create a winning position in renewable packaging across Europe, while also enhancing International Paper’s North American business.

“I firmly believe this strategic combination offers a unique and highly compelling opportunity to create tremendous shareholder value.

“I am also committed to working with the teams to deliver the expected synergies, along with the ongoing profit improvement initiatives across the International Paper portfolio.”