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DS Smith’s £5.8bn takeover by US rival going ahead despite competition

<span>DS Smith makes the cardboard boxes by retailers such as Amazon and Unilever.</span><span>Photograph: Oscar Wong/Getty Images</span>
DS Smith makes the cardboard boxes by retailers such as Amazon and Unilever.Photograph: Oscar Wong/Getty Images

The boss of the FTSE 100 company DS Smith has said its £5.8bn takeover by a US rival is going at “absolutely full steam”, despite concerns it could be derailed by another packaging sector merger.

Miles Roberts, DS Smith’s chief executive, said merger work with International Paper was “going very well” and that he definitely expected the deal to complete.

DS Smith makes the cardboard boxes used by retailers such as Amazon and Unilever, the owner of brands such as Marmite and Dove Soap. The company may not operate the most glamorous business, but since the turmoil of the coronavirus pandemic settled there has been a wave of interest in takeovers within the industry as companies attempt to dominate globally.


DS Smith agreed to be taken over by Tennessee-based International Paper for £5.8bn in April, gatecrashing a £5.1bn agreement with FTSE 100 rival Mondi.

However, in May it emerged that International Paper, which is valued at $16bn, was a possible target for Brazil’s Suzano, controlled by the billionaire Feffer family. It is widely expected that the DS Smith takeover would be dropped if Suzano completed the acquisition.

Suzanosaid in a filing to Brazilian regulators last month that it had not reached a binding deal with International Paper, and it has made no statements since then. Roberts declined to comment on whether he had discussed a possible Suzano bid with International Paper, citing takeover rules.

If the takeover does go ahead, DS Smith would be the latest in a series of big British companies to disappear from the FTSE 100 index. Roberts said “on a personal basis” he rued the departure of businesses from London, “but my personal view has nothing to do with it” because shareholders were clearly in favour.

Roberts said there was a gap in valuations between UK and US businesses with similar qualities, which made it easier for American companies to bid for British rivals rather than the other way around.

In the run-up to the UK general election, which polls indicate are likely to be won convincingly by Labour, Roberts said a new government needed to offer long-term certainty over the direction of its industrial policy – crucially on energy – to help to close the gap. “Where is the power to come from to power our factories?” he said.

In the last year the packaging sector has struggled with inflation and slower consumer demand. On Thursday, DS Smith reported a steep 17% drop in revenues to £6.8bn in the year to the end of April.

Annual profits also dropped, by 24% to £503m, in the year to the end of April, although that was slightly better than had been expected by analysts. Roberts said the company had seen a “noticeable improvement in consumer sentiment” in the second half of its financial year and in recent months.