Mondi Group has expressed preliminary interest in combining with DS Smith, the latter company announced Thursday. Mondi also confirmed the exploration.
“The Board of DS Smith understands that Mondi is considering a possible offer for DS Smith although no proposal has been received at this stage,” according to a filing from DS Smith.
Mondi said an all-share combination with DS Smith “represents an exciting opportunity to create an industry leader in European paper-based sustainable packaging solutions.” Such a combination with DS Smith could capitalize on growth trends in sustainable packaging, vertical integration benefits, supply chain efficiencies and “highly complementary positions and expertise in containerboard, corrugated solutions and flexible packaging,” Mondi said.
A Mondi-DS Smith combination could be worth more than 10 billion pounds based on current market values, Bloomberg reported Thursday.
Mondi is expected to announce by March 7 a firm intention about whether it will or will not make an offer, though that deadline could be extended.
Such an agreement would follow the major pending deal to combine Smurfit Kappa and WestRock announced last September. Smurfit-WestRock is poised to be the heavyweight in the paper packaging industry, though the company is tilted toward sales in the Americas.
Mondi’s talking points mirror some from the Ireland and U.S.-based companies’ deal. Also aiming to ride the sustainability wave, Smurfit Kappa and WestRock said they would offer a broader range of “renewable, recyclable and biodegradable packaging.” The Smurfit-WestRock deal, which would make the world’s largest publicly traded packaging company and whose value could exceed $11 billion, is now expected to close in July.
The Smurfit WestRock combination would result in 67 mills, 500 converting facilities and 100,000 employees across 42 countries. It’s expected 54% of revenue would come from North America, 12% from Latin America and 34% from Europe.
Both Mondi and DS Smith are global companies and have U.K. headquarters. Mondi has 22,000 employees across 100 production sites in 30 countries, with 11 sites listed in the U.S. DS Smith has more than 30,000 people across 30 countries. Its North American operations are headquartered in Atlanta, with 15 manufacturing, paper and recycling facilities with more than 2,000 employees.
Mondi has previously considered a deal with DS Smith, the Financial Times reported Thursday. Bloomberg reported such an exploration in February 2021. The Financial Times noted a combination would bring together “Mondi’s low-cost mills with DH Smith’s box factories.”
DS Smith’s annual revenue totaled about 8.2 billion pounds in the year that ended April 30, 2023, to Mondi’s 8.9 billion euros in the year that ended Dec. 31, 2022. During DS Smith’s most recent half-year earnings update through Oct. 31, the company reported year-over-year declines in box volumes but signs of improving trends.
Shares in DS Smith, which are traded on the London Stock Exchange and are down year over year, jumped about 12% Thursday.
