DS Smith has agreed terms on a £5.8bn all-share takeover from US rival International Paper, which has seemingly won the bidding war with British rival Mondi.

The deal will see DS Smith shareholders receive 0.1285 International Paper shares for each DS Smith share, valuing each DS Smith share at 415p.

The offer effectively gives DS Smith shareholders just over a third of the larger combined entity.

As a result of the deal, the merged company will seek a secondary listing on the London market.

Mondi had initially agreed a £5.1bn deal for DS Smith in March before International Paper trumped that offer.

The offer value represents a premium of approximately 47.7% to the closing price of DS Smith shares before Mondi’s interest became public.

Mondi could still issue a counterbid, but the DS Smith board has recommended shareholders accept the International Paper offer.

DS Smith and International Paper said today the deal would “bring together complementary businesses to create a truly global sustainable packaging solutions leader, with industry-leading positions in two of the most attractive geographies of Europe and North America.

“The combined company’s focus on sustainable packaging makes it well-placed to serve a broad set of customers across a wide range of attractive and growing end-markets.”

Mark S. Sutton, chairman and CEO of International Paper, said: “Combining with DS Smith is a logical next step in International Paper’s strategy to drive profitable growth by strengthening our global packaging business.

“DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements International Paper’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.”

DS Smith CEO Miles Roberts added: “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. 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 International Paper due to the capability and continued commitment of our colleagues.”

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