IP Gets Shareholders' Approval for DS Smith Acquisition, Stock Up
Shares of International Paper IP gained 3% on Friday following the announcement that its shareholders have voted in favor of the pending acquisition of DS Smith Plc DITHF. This deal will strengthen IP’s corrugated packaging business in Europe and prioritize sustainable packaging.
At a special meeting of International Paper’s shareholders held on Friday, around 99% of the shareholders voted in favor of the acquisition. DS Smith had secured the approval of its shareholders earlier in the week.
The acquisition is expected to be accretive to International Paper’s earnings in the first year of closure. It will provide 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.
IP’s Buyout of DS Smith to Boost Offerings, Drive Synergies
On April 16, 2024, International Paper announced that it inked a deal to acquire the entire issued share capital of DS Smith. The offer valued DS Smith's entire issued and to-be-issued share capital at ￡5.8 billion ($7.4 billion) on a fully diluted basis and its enterprise value at ￡7.8 billion ($9.9 billion).
Per the terms of the deal, DS Smith’s shareholders would receive 0.1285 new shares in International Paper for each DS Smith share held. This will result in DS Smith’s shareholders owning 33.7% of the combined entity and the remaining 66.3% will be held by International Paper’s shareholders. Subject to regulatory clearances and other customary closing conditions, the acquisition is now expected to close in the latter part of the fourth quarter of 2024.
The combination of International Paper and DS Smith will establish a global leader in sustainable packaging solutions that is well-positioned in attractive and growing markets. It will have a significantly stronger corrugated packaging business in Europe and enhanced customer offerings.
The move will integrate both companies’ mill and box networks and optimize the supply chains in Europe and the United States. It will leverage the market expertise of two experienced and innovative management teams to enhance innovation, solutions and sustainability products for customers. The merger is expected to drive significant synergies, including higher integration, commercial and operational improvements and economies of scale across sourcing, supply chain and administration.
Another Significant Merger in the Industry Beyond IP-DITHF
In addition to the IP-DITHF combination, a noteworthy merger that took place in the industry was that of WestRock Company and Smurfit Kappa Group Plc. In July, these companies merged to form Smurfit Westrock Plc SW, a global leader in sustainable paper and packaging, operating in 40 countries with more than 500 packaging converting operations and 62 paper mills.
Smurfit Westrock offers an unmatched portfolio of innovative packaging solutions, ranging from corrugated and consumer packaging to Bag-in-Box packaging and point-of-sale displays.
International Paper’s Share Price
International Paper’s shares have gained 37.7% in the past year compared with the industry’s 30% growth.
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IP’s Zacks Rank & Another Stock to Consider
IP currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Another top-ranked stock from the same industry is Sappi SPPJY, which carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for Sappi’s fiscal 2024 earnings is pegged at 42 cents per share. The consensus estimate has moved 17% north in the past 60 days. SPPJY’s shares have gained 12% in a year.
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International Paper Company (IP) : Free Stock Analysis Report
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D S SMITH (DITHF) : Free Stock Analysis Report
Smurfit Westrock PLC (SW) : Free Stock Analysis Report