Amazon box supplier receives merger offer

AMAZON’S cardboard box supplier has been approached by a London-listed challenger over a £10bn merger.

Shares in DS Smith surged 17pc after bosses confirmed the company had received a takeover approach from rival packaging business Mondi.

A tie-up would create one of Europe’s largest cardboard box producers, with a combined market value of £10bn.

The companies said talks were at an early stage. Shares in Mondi fell by almost 3pc. It is not the first time the two have explored a tie-up. Mondi was weighing up a £5bn bid for DS Smith in 2021, though a deal never materialised.

DS Smith was established by the Smith family in east London in the 1940s, and listed on the London Stock Exchange the following decade.

It grew through acquisitions into one of the world’s largest box-making businesses, producing a range of products from Amazon parcels to cereal boxes.

Mondi has its roots in South Africa as a subsidiary of Anglo American after the mining giant built a mill in the country. Alongside other packaging companies, DS Smith and Mondi benefited from demand for parcels as lockdowns drove a surge in online shopping.

But the firms have been forced to navigate a slowdown in demand as e-commerce returns to pre-pandemic levels. Mondi said a deal with DS Smith would allow the combined company to benefit from efficiencies and take advantage of “structural growth trends in sustainable packaging”.

It would unite two major FTSE 100 companies at a critical time for the London Stock Exchange, which is trying to stem a flow of defections to the US.