Shares of DS Smith experienced a significant boost following the announcement that the company has received a highly preliminary expression of interest from its larger competitor, Mondi. However, it should be noted that no formal proposal has been received at this stage.
At 1300 GMT, DS Smith shares were up 27.80 pence at 308.90 pence, making it one of the top performers on the FTSE 100 index. Despite this positive development, the company’s shares have actually dropped by 12% over the past year. Conversely, Mondi shares have declined by 54.50 pence (3.95%) and 11% over the past 12 months.
While DS Smith recognizes the possibility of a deal, it emphasizes that there is no certainty regarding the terms or the final outcome.
If a deal were to materialize, it would result in the formation of a company valued at an impressive £10.365 billion ($13.09 billion), based on the current market values of both companies.
According to U.K. Takeover Panel rules, Mondi has until March 7 to finalize a formal offer or withdraw its interest.
In response to DS Smith’s statement, Mondi confirmed that it is currently considering an all-share merger with DS Smith. Its rationale is that such a merger would establish a leading player in the European paper-based sustainable packaging solutions industry. This aligns with its ongoing commitment to exploring growth opportunities within its capital allocation framework.
Despite these discussions, Mondi cautions that it is not certain whether an offer will actually be made to acquire DS Smith.
