The boards of Mondi Group and DS Smith announced that they have reached an agreement in principle in Mondi’s all-share offer to acquire DS Smith for $6.57 billion.

The combination would create a mega paper and packaging company with a market value of nearly $13 billion.
Under the terms of the agreement, Mondi shareholders would own 54 percent while DS Smith shareholders would own 46 percent.

“The combination is an exciting opportunity to create a pan-European industry leader in paper-based sustainable packaging solutions, with complementary geographic footprints, leading customer relationships, a strong balance sheet and cash flow profile, and the potential to deliver substantial benefits to respective shareholders, customers, employees and related stakeholders,” the companies said in a joint release.

Philip Yea would be Chair, Andrew King would be the Chief Executive Officer while Mike Powell would be the Chief Financial Officer of the enlarged Mondi Group.

The boards of the companies believe that “substantial synergies” will occur by combining the two pan-European companies which would result from vertical integration and expertise in containerboard, corrugated solutions and flexible packaging, as well as expected benefits from economics of scale and efficiencies across a combined supply chain and administration.
The companies cited increased exposure to structural growth trends in sustainable packaging as one of the key benefits of the combination.

The companies also maintain that combining their strengths in the corrugated value chain will result in cost efficient virgin containerboard mills; a well-located converting network; and strategically located and integrated recycled containerboard production.

The combination comes at a time as packaging companies are experiencing lower volumes and pricing following the surge in e-commerce driven by online shopping during the Covid pandemic.

The companies, which are currently evaluating the quantity of synergies arising from the deal, said it would benefit both shareholders with increased exposure to structural growth trends in sustainable packaging and a highly complementary geographic footprint, creating a leading player in corrugated packaging across Europe.

In another multi-billion offer last fall, Mondi’s rival Smurfit Kappa announced the purchase of WestRock for $11 billion deal that is expected to close in July 2024.

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