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International Paper to Acquire DS Smith

The two companies, who share a commitment to sustainability and responsible growth, aim to strengthen customer value through enhanced offerings, innovation and geographic reach.


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International Paper and DS Smith Plc announced that they have reached agreement on the terms of a recommended all-share combination, creating a global leader in sustainable packaging solutions.

The terms of the Combination value each DS Smith share at 415 pence per share, and will result in IP issuing 0.1285 shares for each DS Smith share, resulting in pro forma ownership of 66.3% for IP shareholders and 33.7% for DS Smith shareholders, implying a transaction value of approximately $9.9 billion. The Combination is expected to close by the fourth quarter of 2024.

"Combining with DS Smith is a logical next step in IP's strategy to drive profitable growth by strengthening our global packaging business," said Mark S. Sutton, Chairman and CEO of IP. "DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements IP's capabilities and will accelerate growth through innovation and sustainability. We are confident this combination will drive significant value for our employees, customers, and shareholders."

CEO-Elect of IP, Andrew K. Silvernail added, "Bringing together the capabilities and expertise of both companies will create a winning position in renewable packaging across Europe, while also enhancing IP'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 IP portfolio."

CEO of DS Smith, Miles Roberts, said, "The combination with IP 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. It combines two focused and complementary businesses. DS Smith has grown significantly through a dedication to customers, focus on innovation, quality of packaging and high levels of service. In a dynamic sustainable packaging landscape, the combination will enhance our global proposition to customers, create opportunities for colleagues and drive value for shareholders who can remain fully invested in such an exciting business. I am proud of all that DS Smith has achieved to date and am sure that the business will continue to flourish as part of a combined group with IP due to the capability and continued commitment of our colleagues."

Compelling Strategic Opportunity

  • Creates a global leader in sustainable packaging solutions, focused on the attractive and growing North American and European regions
    • Establishes a differentiated corrugated packaging company with approximately 90% of revenue from sustainable fiber-based packaging.
    • Expands IP's footprint and capabilities in the attractive European region.
      • Combines DS Smith's extensive European sales of $9.4 billion in FY23 with IP's European sales of $1.5 billion in FY23.
    • Enhances IP's business in North America's eastern region with the addition of DS Smith's complementary box network.
  • Complementary business models increase vertical integration to improve profitability
    • Integration of approximately 500-600k tons of containerboard from DS Smith into the IP mill system will increase the combined integration rate to approximately 90%.
    • Optimizes the combined network of mills, box plants, and supply chains.
  • Strengthens customer value proposition through enhanced offerings, innovation, and geographic reach
    • Enhances ability to serve global customers with a highly complementary, quality portfolio and broader product offerings.
    • Increases exposure to the attractive, fast-moving consumer goods and e-commerce segments.
    • Greater opportunity for cross-selling products and services across respective regional and global customers.
    • Combines market and commercial expertise, and innovation capabilities.
    • Generates revenue synergies primarily from incremental sales generated by DS Smith's Innovation Network being extended to IP's European customers.
  • Accelerates sustainability, including through innovation, for the benefit of all stakeholders
    • Combines IP and DS Smith's experienced management teams to accelerate innovative sustainable solutions and advance the circular economy.
    • Expands a portfolio of sustainable products to meet customers' evolving preferences.
    • Aligns commitment to grow responsibly through environmental stewardship, community engagement, and strong corporate governance.
  • Similar cultures and experienced teams ensure low integration and operational risk
    • Shared purpose-driven cultures with a relentless focus on sustainability, responsible growth, positively impacting communities and a commitment to creating innovative solutions that meet customer needs.
    • Intention to retain DS Smith's London headquarters as IP's new EMEA headquarters.
    • Both the IP and DS Smith teams, including IP CEO-Elect Andrew K. Silvernail, have expertise and experience in successfully integrating large scale acquisitions.

Significant Value Creation

  • Substantial synergies through global scale and optimization
    • Expected to deliver 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 of the Combination, comprised of the following:
      • 92%, or $474 million per annum of cost synergies, across the following sources:
        • 47%, or $241 million from operational synergies across the combined network of mills, box plants, and global supply chain, including:
          • Integration benefit of balancing containerboard supply positions (approximately 500 to 600k tons);
          • Freight optimization benefits; and
          • Operational efficiencies across mill and box network from product and system optimization, and sharing technology expertise.
        • 23%, or $117 million from overhead synergies by reducing duplicative corporate and business overhead expenses; and
        • 23%, or $116 million from operational procurement synergies from increased scale of the combined company.
      • 5%, or $26 million from capex procurement synergies, by leveraging increased scale of the combined company; and
      • 3%, or $14 million of revenue synergies.
    • All potential synergies have been independently validated as part of a Quantified Financial Benefits Statement under Rule 28.1(a) of the UK Takeover Code (the "Code").
    • These synergies are expected to arise as a direct result of the Combination and could not be achieved independently of the Combination.
    • IP anticipates that the total costs to achieve the synergies would be approximately $370 million.
    • IP expects that approximately 33% of the synergies would be achieved in year one, with approximately 66% achieved in year two and 95% achieved in year three following close of the transaction, all on a run-rate basis.
    • Aside from the one­time costs referred to above, no material dis­synergies are expected as a direct result of the Combination.
  • Strong pro forma financial profile will enable accelerated growth
    • Pro forma 2023 combined revenues of approximately $28.2 billion5 and combined adjusted EBITDA of approximately $4.1 billion6.
    • Expected to be EPS accretive in the first year following close of the transaction, reflecting synergies expected to be realized.
    • Return on invested capital from the Combination is expected to exceed IP's weighted average cost of capital by the end of the third year following close of the transaction.
    • Maintains strong balance sheet and expected to maintain IP's current credit rating.
    • Solid cash flow profile provides the financial strength needed to deliver profitable growth.
    • Expect to maintain IP's current dividend.
  • Creates greater liquidity for investors and a more diversified shareholder base
    • Primary listing on the New York Stock Exchange and a secondary listing on the London Stock Exchange.
    • Deeper liquidity as a result of improved position within the S&P 500 based on implied combined market capitalization.
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