International Paper has officially completed its acquisition of British packaging manufacturer DS Smith, solidifying its position as a leader in sustainable packaging solutions. The deal, valued at approximately $9.9 billion, was finalized on January 31, 2025, and marks the beginning of a new era for the combined company, now operating across more than 30 countries.
Andy Silvernail, chairman and CEO of International Paper, expressed enthusiasm about the merger, stating, "The combination of International Paper and DS Smith will create the world’s leading sustainable packaging company." The integration of resources and expertise from both companies aims to not only expand the geographic footprint but also to drive innovation and sustainability, key focal points of the newly formed entity.
The acquisition involved issuing 0.1285 shares of International Paper for each ordinary share of DS Smith, resulting in about 179.85 million new shares of stock. Following the completion of the deal, trading of these new shares is expected to commence on February 4, 2025, under the ticker symbols "IP" on the New York Stock Exchange and "IPC" on the London Stock Exchange.
Geoff Drabble, chair of DS Smith, highlighted the strategic benefits of the merger, saying, "The combination with International Paper creates a truly international sustainable packaging solutions leader... well positioned in attractive and growing markets across Europe and North America." This commitment to sustainability and responsible environmental stewardship will define the direction of the combined company.
The merger, which was approved by DS Smith shareholders on October 7, 2024, follows several legal and regulatory steps established by the UK’s Companies Act 2006. The process culminated with the Court's validation of the acquisition, making it effective shortly after the transaction was announced.
This acquisition is projected to yield operational synergies resulting in cash savings of at least $514 million over the next four years. These efficiencies are expected to arise from reducing duplicated costs and improving procurement practices across the unified network of mills and box plants.
With International Paper's annual sales reported at $18.6 billion and DS Smith's at £6.82 billion, the combined entity is poised to take advantage of significant market opportunities. The merger aims to offer enhanced service to customers and accelerate growth by capitalizing on the shared strengths of both companies.
Former DS Smith shareholders will hold approximately 33.7% of the combined entity, thereby providing them with significant stakes as the new company embarks on its mission. International Paper shareholders will maintain the majority with 66.3% ownership.
Key leadership changes have also occurred with the merger, as several DS Smith board members, including Miles Roberts and Richard Pike, are set to step down. Meanwhile, Tim Nicholls, Vincent Bonnot, and Steven Hieatt have been appointed to the DS Smith board post-acquisition.
Drabble expressed confidence about the future, complimenting the efforts of DS Smith employees: "I am proud of all DS Smith has achieved and... I’m sure the business will continue to flourish..." This sentiment reinforces the goal of amalgamated efforts aimed at improving sustainability and profitability.
The strategic consolidation between International Paper and DS Smith arrives at a time when the demand for sustainable packaging solutions is rapidly increasing. Both companies are committed to leveraging their expanded portfolios to meet and exceed customer expectations across diverse markets, particularly focusing on North America and regions throughout Europe.
Given the growing emphasis on environmental accountability within the global packaging industry, this merger positions the combined company to be at the forefront of innovation. By prioritizing customer experience, innovation, and sustainable practices, International Paper and DS Smith are uniquely positioned to redefine industry standards and expectations.
Investors are closely watching the post-merger developments as they signal the potential for enhanced profitability and market competitiveness. With reported strong buy recommendations, the market outlook for International Paper appears favorable, raising anticipation about how this newly combined entity will perform as it begins trading its shares.
This merger, as announced by both companies, not only holds promising prospects for the stakeholders involved but also sets the stage for transformational changes within the packaging sector itself. With their aligned missions and shared visions for the future, International Paper and DS Smith are ready to chart new territories as pioneers of modern sustainable packaging solutions.