Equities

International Paper Considers London Listing After Bold Move for DS Smith Acquisition

POSITIVE

International Paper eyes £5.7 billion acquisition of DS Smith, considering secondary London listing to attract UK investors.

By Max Weldon

4/4, 10:19 EDT
International Paper Company
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Key Takeaway

  • International Paper Co. eyes a £5.7 billion acquisition of DS Smith Plc, considering a secondary London listing to appeal to UK investors.
  • The move signals industry consolidation and confidence in long-term growth, amidst a pandemic-driven demand surge for packaging.
  • Anticipated annual synergies of $514 million post-acquisition highlight International Paper's strategic focus on value creation and operational excellence.

Strategic Expansion on the Horizon

International Paper Co., a leading US packaging company, has recently made headlines with its bold move to consider a secondary listing in London, contingent upon its successful acquisition of UK-based DS Smith Plc for a striking £5.7 billion ($7.2 billion). This strategic decision underscores International Paper's commitment to not only expanding its global footprint but also to catering to the preferences of UK-based investors, demonstrating a keen understanding of investor needs and market dynamics.

A Bid to Win Over Investors

In what can be seen as a savvy maneuver to appeal to UK investors, International Paper's consideration for a London listing comes in the wake of its competitive bid against Mondi Plc for DS Smith. This move is poised to enhance International Paper's attractiveness among investors who prefer London-listed shares, showcasing the company's adaptability and strategic foresight in navigating the complexities of international markets.

Industry Consolidation and Growth

The paper and packaging industry is witnessing a significant phase of consolidation, highlighted by International Paper's bid for DS Smith and the recent acquisition of WestRock Co. by Smurfit Kappa Group Plc. This trend is indicative of the industry's robust growth trajectory, fueled by a pandemic-driven surge in demand for packaging solutions as consumers increasingly turned to online shopping. Although there has been a normalization in demand with the reopening of physical stores, the strategic moves by industry players like International Paper signal confidence in the sector's long-term growth prospects.

Synergies and Value Creation

International Paper's proposed acquisition of DS Smith is not just a strategic expansion move but also a calculated effort to unlock substantial value through synergies. The company anticipates annual synergies of $514 million four years post-acquisition, with an investment of $370 million to achieve these efficiencies. This projection underscores International Paper's focus on creating value for shareholders through strategic acquisitions and operational excellence.

Leadership Vision

Mark Sutton, CEO of International Paper, articulated the strategic rationale behind the bid, stating, "Bringing International Paper together with DS Smith is a logical next step in International Paper’s strategy to create value by strengthening our packaging businesses in North America and Europe." This vision reflects a clear strategic direction aimed at bolstering International Paper's position as a leader in the global packaging industry.