The Boards of Mondi plc and DS Smith Plc announced they have reached an agreement in principle on the key financial terms of a possible all share offer by Mondi for DS Smith. Mondi would acquire the entire issued and to be issued share capital of DS Smith, (the "Combination").
Mondi shareholders would own 54 percent, and DS Smith shareholders would own 46 percent of the issued and to-be-issued share capital of Mondi. Based on Mondi's closing share price of 1,381 pence per share on 7 February 2024 (being the day prior to the commencement of the offer period), the terms of the Combination would represent an implied value of 373 pence per DS Smith share and a premium of 33 percent to DS Smith's closing share price of 281 pence per share on 7 February 2024 (being the day prior to the commencement of the offer period).
Philip Yea would be Chair, Andrew King would be the Chief Executive Officer and Mike Powell would be the Chief Financial Officer of the enlarged Mondi Group and
Three Non-Executive Directors of DS Smith are expected to join the enlarged Mondi Group Board.
Compelling Strategic and Financial Rationale for both Mondi and DS Smith shareholders
According to a statement by the companies: "The Combination is an exciting opportunity to create a pan-European industry leader in paper-based sustainable packaging solutions, with complementary geographic footprints, leading customer relationships, a strong balance sheet and cash flow profile, and the potential to deliver substantial benefits to respective shareholders, customers, employees, and related stakeholders."
The key benefits of the Combination to both sets of shareholders include:
Increased exposure to structural growth trends in sustainable packaging; A highly complementary geographic footprint creating a leading player in corrugated packaging across Europe. Combining both Mondi's and DS Smith's strengths in the corrugated value chain: Cost efficient virgin containerboard mills; A market leading, well located converting network, focused on delivering innovative solutions for customers; and strategically located and integrated recycled containerboard production.
Enhanced vertical integration brings with it a more balanced paper position; strengthened ability to serve global FMCG customers, leveraging proven innovation capabilities of both Mondi and DS Smith; Significant value creation for both Mondi and DS Smith shareholders from substantial synergies.
The benefit to the Combination of Mondi being a leader in flexible packaging, a strong balance sheet supported by a solid investment grade credit rating, and a strong cash flow profile providing greater resilience through the cycle and strategic flexibility for continued growth investment; A strong customer focus, building on the expertise of two well regarded and highly experienced management teams, driving innovation and delivering value to customers; and Commitment to sustainability in packaging with a complementary portfolio of products, joining forces to spearhead the shift towards a more circular and sustainable economy.
For more information:
Jenny Hampshire
Mondi
www.mondigroup.com
Iain Simm
DS Smith
www.dssmith.com