DS Smith suitor to seek a London listing if bid a success

THE world’s largest paper company will pursue a London stock market float if its £5.7bn takeover of Amazon packaging firm DS Smith goes ahead.

Us-based International Paper, which has a market value of around $13.6bn (£10.7bn), said it will seek a secondary listing in London as part of any deal for the cardboard box maker.

While it would still be headquartered in Memphis, Tennessee, bosses proposed a new base at DS Smith’s existing headquarters in London.

The pledge will boost the London Stock Exchange, which is struggling to attract new listings amid a high-profile exodus to rival stock markets.

It comes as International Paper gears up for a potential bidding war over DS Smith with rival suitor Mondi. The US company last month valued DS Smith at £5.7bn. The move threatens to gatecrash a £5.1bn offer from London-listed Mondi agreed in principle this month.

International Paper is yet to make a firm offer and both have until 5pm on April 23 to table a bid or walk away.

International Paper said it had made “significant progress” in due diligence over its potential bid. It said the deal would strengthen its packaging business, which now accounts for 84pc of sales, and would deliver more than $500m of pre-tax cost savings each year. Mark Sutton, chief executive of International Paper, said: “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.

“By combining the strengths of both, we can enhance our offering of sustainable packaging solutions for customers in attractive and growing markets.”

DS Smith said it was continuing merger discussions with Mondi, which proposes creating a packaging giant worth more than £10bn. Shares in DS Smith rose 2pc as investors welcomed the prospect of a bidding war.

DS Smith traces its roots back to a box-making business started by the Smith family in east London in the 1940s. It was listed in London in the 1950s and now makes packaging for products ranging from cereal boxes to Amazon parcels.