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Mondi is considering an all-share bid to buy DS Smith, with a potential merger projected to yield a combined value exceeding £10 billion (€11,714,884,660). 

Although no formal proposal had been made, DS Smith previously announced that it had received a highly preliminary expression of interest from Mondi. The announcement precipitated DS Smith’s shares rising by 13%, which brought its market value up to £4.49 billion (€5,258,045,885) – despite its share price having almost halved from an all-time high in 2018. Meanwhile, Mondi’s stock decreased by 3.7% on the London Stock Exchange.  

It also recently sold three other packaging plants to the Gotek Group for RUB 1.6 billion in 2022, and its largest plant in Russia to real estate developer Sezar Group for RUB 80 billion last September – thus completing its exit from Russia in light of the invasion of Ukraine.  

As per Rules 2.6(a), 2.7, and 2.8 of the City Code on Takeovers and Mergers, Mondi must make a firm offer before 17:00 on 7th March 2024 for the action to go ahead. This deadline can be extended with the consent of the Takeover Panel. 

In a statement, Mondi said: “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.” 

Paper packaging sales dramatically increased during the COVID-19 pandemic as consumers took to e-commerce. However, the sector experienced low volumes and prices in 2023 due to difficult market conditions, including the effects of the European energy crisis. 

The news comes after Smurfit Kappa and WestRock agreed to combine their businesses into a $20 billion company in September 2023. Smurfit WestRock is set to be based and domiciled in Dublin, Ireland, with its North and South American operations headquartered in Atlanta, Georgia. 

Among other benefits, this move is expected to bring together and diversify the companies’ respective packaging portfolios; strengthen their development of renewable, recyclable, and biodegradable solutions; expand their global outreach; and solidify their consumer focus.  

WestRock stockholders will apparently receive a total consideration equivalent to $43.51 per WestRock Share, and one New Share will be distributed for each ordinary share in Smurfit Kappa. Shareholders and stockholders of each company are set to own a respective 50.4% and 49.6% of Smurfit WestRock, with the number of outstanding shares on the day of the announcement taken into consideration. 

The merger is set to be completed in the second quarter of 2024, subject to customary closing conditions, and both companies’ Boards of Directors are encouraging their shareholders to express their agreement, which would indicate the financial benefits of the agreement. 

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