International Paper IP has submitted a definitive proxy statement to the U.S. Securities and Exchange Commission related to its pending acquisition of DS Smith Plc DITHF. IP moves a step closer to finalizing the deal, which will strengthen its corrugated packaging business in Europe and prioritize sustainable packaging.
The acquisition is expected to be accretive to International Paper’s earnings in the first year of closure and 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 share price increased 2% on the update.
IP Shareholders to Vote on New Share Issuance
At a special meeting to be held on Oct. 11, 2024, International Paper’s shareholders will vote by proxy to approve the issuance of new IP shares with a par value of $1.00 per share in connection with the IP-DITHF combination. The combination will be implemented by the rules of the U.K. Takeover Code and English Law.
International Paper will send a copy of the definitive proxy statement and instructions on how to vote to its shareholders. The company’s board of directors unanimously recommends that IP shareholders vote in favor of the proposal.
On Wednesday, International Paper published a prospectus with the U.K. Financial Conduct Authority regarding the trading of IP's new shares at a par value of $1.00 per share on the London Stock Exchange on the completion of the combination.
DS Smith Shareholders to Vote on IP-DITHF Deal in October
On Wednesday, DS Smith sent to its shareholders a scheme document prepared in accordance with Part 26 of the U.K. Companies Act 2006. It contains the full terms and conditions of the combination. The company has set Oct. 7, 2024, as the date of its shareholder meeting to ask for their approval for the combination.
Benefits of the International Paper & DS Smith Deal
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 the company’s enterprise value at £7.8 billion ($9.9 billion).
Per the terms of the deal, DS Smith shareholders would receive 0.1285 new shares in International Paper for each DS Smith share held. This will result in DS Smith shareholders owning 33.7% of the combined entity and the remaining 66.3% will be held by International Paper’s shareholders.
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.
A Noteworthy Merger Apart From IP-DITHF in the Industry
In addition to the IP-DITHF combination, a noteworthy merger in the Paper and Related Products industry was of WestRock Company and Smurfit Kappa Group Plc. in July forming Smurfit Westrock Plc SW. This created 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.
IP’s Share Price Outperforms Industry
International Paper’s shares have gained 41.8% in the past year compared with the industry’s 22.1% growth.
Image Source: Zacks Investment Research
International Paper’s Zacks Rank & Stock to Consider
IP currently carries a Zacks Rank #4 (Sell).
A better-ranked stock from the basic materials space is Carpenter Technology Corporation CRS, which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.06 per share. The consensus estimate for 2025 earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS shares have gained 106.1% in a year.
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International Paper Company (IP) : Free Stock Analysis Report
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
D S SMITH (DITHF) : Free Stock Analysis Report
Smurfit Westrock PLC (SW) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
