The world’s third-largest paper manufacturer has made an ambitious US $15 billion all-cash bid to secure International Paper – a deal that would not only establish the world’s largest paper consortium but also scuttle International Paper’s US $7.2 billion (or £5.8 billion) takeover of DS Smith.
As reported by Reuters overnight, Brazilian pulp and paper giant Suzano approached the US-based International Paper with an all-cash offer.
Suzano, already the world’s largest pulp manufacturer, is in talks to arrange debt financing to support its bid, which is understood to have been rejected as inadequate.Â
According to Reuters sources, Suzano informed International Paper that the offer would be conditional on abandoning its deal with DS Smith. International Paper declined to comment on Suzano’s approach, instead saying it is continuing to focus on finalising the DS Smith deal:
“The Internationa Paper team, led by new CEO Andy Silvernail, is executing business strategies and pursuing commercial and cost improvement initiatives across the portfolio to achieve best-in-class profit margins and significant earnings growth. In addition, as industry conditions continue to improve, International Paper will come out of a cyclical bottom for earnings.”
Last month, Wood Central reported that International Paper’s takeover of DS Smith promised to bring the two paper giants together by capitalising on “industry-leading positions in two of the most attractive geographies of Europe and North America.”
In joint statements published by International Paper and DS Smith, both claim the deal will create a global leader in sustainable packaging and create opportunities to drive savings across the mill network, supply chains, and freight costs.
In addition, they expect to reap cost savings of at least £413m per year by 2029/2030—the fourth year of the proposed takeover. To achieve this, more than 400 senior management personnel are on the chopping block, which equates to 0.6% of the combined workforce of a 69,000 workforce – which includes 4,750 staff in the UK.
DS Smith was founded in east London in the 1940s by two cousins, David G and David S Smith, as a box-making business – named after their grandfather, a Polish immigrant, who was involved in the original set-up.
- To find out more about the International Paper takeover of DS Smith, click on Wood Central’s article from last month.
