International Paper Secures EU Nod for $7.2 Billion DS Smith Acquisition

International Paper (IP) has received the green light from the European Commission for its $7.2 billion acquisition of DS Smith (SMDS), creating a global leader in sustainable packaging solutions. The deal, announced in April 2024, is expected to close in the fourth quarter of 2024, subject to regulatory clearance and other customary closing conditions.

The EU's conditional approval, announced on January 24, 2025, requires International Paper to divest certain box plants in Europe to address competition concerns. The plants to be divested include Mortagne, Saint-Amand, and Cabourg in France, Ovar in Portugal, and Bilbao in Spain. Despite this requirement, International Paper remains optimistic about the strategic value of the acquisition.

The acquisition of DS Smith by International Paper is expected to generate significant synergies, with initial projections estimating at least $514 million (£413 million) of pre-tax cash synergies on an annual run-rate basis by the end of the fourth year following the Effective Date. These synergies are expected to be achieved through global scale and optimization, enhanced customer value proposition, increased vertical integration, and cost synergies.

The combined company will have industry-leading positions in two of the most attractive geographies, Europe and North America, with a focus on sustainable packaging solutions. This acquisition will strengthen International Paper's global packaging business and provide both sets of customers with an increased variety of choices and a superior portfolio of products across two continents.

International Paper's Chairman and CEO, Andy Silvernail, commented on the EU's conditional approval: "While we would have preferred to keep the selected locations as part of our portfolio, these are attractive sites and we are confident we will find a suitable buyer. We are very pleased to have reached this important milestone in our acquisition of DS Smith. This combination will create a global leader in sustainable packaging solutions, focused on the attractive and growing North American and EMEA regions."

The acquisition remains subject to the Court sanctioning the Scheme at the Court Hearing, the delivery of the Court Order to the Registrar of Companies, and the satisfaction or (if capable of waiver) the waiver of the remaining Conditions to the Scheme. The expected timetable of principal events for the implementation of the Scheme is set out below:

* Court Hearing (to sanction the Scheme): 30 January 2025
* Last day of dealings in, and for registration of transfers of, and disablement in CREST of, DS Smith Shares: 31 January 2025
* Scheme Record Time: 6.00 p.m. on 31 January 2025
* Effective Date of the Scheme: 31 January 2025
* Suspension of listing of, and dealings in, DS Smith Shares: 7.30 a.m. on 3 February 2025
* Issue of New International Paper Shares after 5.00 p.m. (New York time) on 3 February 2025
* Cancellation of listing of DS Smith Shares by 8.00 a.m. on 4 February 2025
* Admission of, and commencement of dealings in, New International Paper Shares on the London Stock Exchange by 8.00 a.m. on 4 February 2025
* Admission of, and commencement of dealings in, New International Paper Shares on the New York Stock Exchange by 9.30 a.m. (New York time) on 4 February 2025
* New International Paper Shares are credited to CREST accounts of DS Smith Shareholders (in respect of Scheme Shares held in uncertificated form only) on or as soon as possible after 9.30 a.m.(New York time) on 4 February 2025 but not later than 14 calendar days after the Effective Date
* New depositary interests issued by the DI Custodian (in respect of Scheme Shares held in certificated form only) on or as soon as possible after 9.30 a.m.(New York time) on 4 February 2025 but not later than 14 calendar days after the Effective Date

In conclusion, International Paper's acquisition of DS Smith, subject to the EU's conditional approval and other closing conditions, is expected to create a global leader in sustainable packaging solutions, with significant synergies and a strong market position in Europe and North America. The combined company will be well-positioned to serve a broad set of customers across attractive and growing end-markets, driving value for employees, customers, and shareholders.