DS Smith approached by Mondi over potential £10bn packaging merger

London’s Mondi has proposed creating a more than £10 billion packaging giant in a renewed approach for rival DS Smith, it was revealed on Thursday.

Three years after reportedly mulling an approach for the business, Mondi has expressed interest in combining with its rival, DS Smith said.

The news sent shares in DS Smith soaring, up by as much as 15% at one point. But details are scant, and a potential deal still appears to be some way off.

“The board of DS Smith notes the recent media speculation and confirms that it has received a highly preliminary expression of interest from Mondi plc regarding a combination with DS Smith,” the business said in a statement to investors.

“The board of DS Smith understands that Mondi is considering a possible offer for DS Smith although no proposal has been received at this stage.”

“There can be no certainty as to whether any proposal will be made or the terms of any such proposal. A further announcement will be made if and when appropriate.”

The deal would combine two packaging companies with a combined market value of around £10.4 billion as the share prices stood on Thursday.

It is not the first time such a tie-up has been mooted. In February 2021, Bloomberg reported that Mondi was weighing a £5 billion takeover of its rival.

At the time, the packaging industry was benefitting from a pandemic-era boom in online deliveries, which caused a jump in demand for the packaging that orders come in.

Mondi is now required to announce a plan to make a firm offer for DS Smith by the close of play on March 7, or confirm that it does not intend to bid for the business.

The company confirmed it is “in the early stages of considering a possible all share combination with DS Smith”.

It added: “Mondi believes that a possible all-share combination with DS Smith represents an exciting opportunity to create an industry leader in European paper-based sustainable packaging solutions.”