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Mondi to Buy DS Smith for GBP5bn and Create Packaging Giant

Mondi agreed to buy DS Smith for GBP5.1bn (USD6.5bn) in a deal that would create one of the world’s largest makers of packaging.

The agreement in principle has an implied value of 373 pence a share, according to a statement Thursday. That’s a 33% premium compared with DS Smith’s price on Feb. 7, the day before the company said it had received an initial approach from Mondi.

This strategic combination, they claim, will not only lead to cost savings but also leverage the benefits of greater scale. The impending merger follows in the wake of a similar consolidation trend, with rival Smurfit Kappa Group’s acquisition of WestRock Co. last year, forming what was dubbed an Irish-American powerhouse.

According to the proposed terms, Mondi shareholders are set to hold a majority stake of 54% in the combined entity, leaving DS Smith shareholders with the remaining portion.

Under the stringent regulations governing takeovers in the UK, Mondi faced a critical decision deadline until Thursday to either proceed with a firm offer for DS Smith or abandon the pursuit altogether. However, Mondi has announced that alongside a preliminary agreement, the deadline has been extended to April 4, providing additional time to formalize the offer.