US Bidder Eyes Secondary London Listing In Battle For DS Smith
(Bloomberg) -- International Paper Co. said it will consider a secondary listing in London if it succeeds in winning the battle to buy UK rival DS Smith Plc for £5.7 billion ($7.2 billion).
The US packaging company, whose primary listing is in New York, gatecrashed a proposed £5.1 billion takeover of DS Smith by Mondi Plc, another British rival, last month. Its latest move will be seen as an attempt to try win over UK-based investors who would rather own London-listed shares.
Read More: DS Smith Jumps After US Talks Raise Prospect of Bidding War
The London Stock Exchange is struggling at the moment to prevent companies from choosing rival financial centers following a period of underperformance, a dearth of initial public offerings and an exodus of large corporates.
DS Smith traces its roots back to a box-making business started by the Smith family in East London in 1940 and floated in London in the late 1950s. It is one of the world's largest cardboard box makers and produces packaging for everything from cereal boxes to Amazon parcels.
Shares in DS Smith and Mondi both ticked up slightly after the statement as investors anticipate a bidding war. DS Smith shares are up more than 30% in the past year.
The paper and packaging sector has been consolidating, with Smurfit Kappa Group Plc agreeing last year to acquire WestRock Co. to create an Irish-American powerhouse. The industry benefited from a surge in demand during the pandemic as consumers under lockdown ordered more goods online. However, demand has since fallen back as shoppers returned to stores.
International Paper said its offer for DS Smith will deliver synergies of $514 million annually from four years into the completion of any deal. This would cost $370 million to achieve, it added.
“Bringing International Paper together with DS Smith is a logical next step in International Paper's strategy to create value by strengthening our packaging businesses in North America and Europe,” said Chief Executive Officer Mark Sutton.
DS Smith is talking to both Mondi and International Paper and the two bidders have until April 23 to table firm offers or walk away.
More stories like this are available on bloomberg.com
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