International Paper has successfully completed its acquisition of DS Smith, marking one of the largest deals in the packaging industry valued at $7.2 billion. The completion of this acquisition, announced on February 1, 2025, positions International Paper as the world's leading sustainable packaging company.
The new entity will operate out of Memphis, Tennessee, which is also the headquarters of International Paper. Aside from its U.S. base, the company will establish its European headquarters in London, previously home to DS Smith. The merger is anticipated to achieve substantial synergies, with estimates of at least $514 million, according to filings made by International Paper.
Andrew Silvernail, CEO of International Paper, expressed confidence about the merger, stating, "The combination of International Paper and DS Smith will create the world’s leading sustainable packaging company." He emphasized the company's unique geographic footprint and comprehensive suite of sustainable packaging products and services, highlighting expectations for accelerated growth and improved profitability as they continue serving customers effectively.
Under the terms of the acquisition, legacy International Paper shareholders will now own 65.9% of the combined company's stock, whereas legacy DS Smith shareholders will retain about 34.1%. DS Smith is set to suspend share trading on the London Stock Exchange, effective February 3, 2025, with its shares scheduled to be delisted on February 4, 2025. The new entity’s shares are expected to start trading on the New York Stock Exchange and London Stock Exchange on February 4, coinciding with the delisting of DS Smith.
The road to this acquisition wasn't entirely smooth; initially announced as long ago as April 2024, regulatory reviews delayed its closure until early 2025. The European Commission approved the acquisition, permitting it under the condition International Paper divested five box plants across Europe to mitigate competition concerns within the packaging sector.
This merger also signifies the culmination of heightened competition for DS Smith. Before International Paper's engagement, Mondi had shown interest, sparking what can be described as a bidding war before Mondi eventually stepped back. Complicatively, Brazilian pulp producer Suzano made overtures to acquire International Paper but retracted when IP did not entertain those discussions.
Silvernail, who joined International Paper less than a year ago, has been proactive since launching his turnaround strategy, which addressed what he characterized as long-standing performance declines at the company. A series of closures at IP facilities were announced last autumn, resulting in approximately 1,000 job losses. The successful acquisition of DS Smith now boosts International Paper's standing among global packaging leaders, placing it alongside firms like Smurfit Westrock.
The world of packaging is seeing transformative changes with this deal and others in recent years. For example, Smurfit Kappa's acquisition of WestRock, announced previously, set off waves of consolidation within the industry, indicative of the push for expanded operational scale and diversified product offerings to meet ever-growing consumer demand.
Industry observers continue to monitor these developments, considering not just the immediate impacts but also the broader market shifts the acquisition of DS Smith by International Paper signals about the future of packaging. The merger reflects strategic responses to industry challenges such as sustainability requirements, competitive pricing, and innovation demands.
With this acquisition completed, International Paper is poised for significant changes as it integrates DS Smith's operations and expertise. The momentum gained through the merger may well lead to new possibilities within the packaging sector, shaping how the industry will respond to future trends and challenges.