Smith (ds) Share Discussion Threads

[mcunliffe1] 17/4/2024 17:55

jeffian/anhar - a fascinating discussion. I can appreciate jeffian's position as I feel that were I (still) a SMDS shareholder I'd find it hard to evaluate which offer is the better as neither comes with a fixed price tag so to speak.


With all these 'paper' offers perhaps all three paper producers will benefit.

It brings to mind, about 15 years back, a surreal situation I encountered whilst in the first week or so of delivering products for a blind charity. The gentleman wanted to pay me for the products with newspapers - severl to be exact. When I explained the charity really required money or a cheque he came back with magazines instead of the newspapers. I politely declined and left with the products.

A few months later I returned with another order he'd made with the charity and everything went perfectly - paid in cash.

I learned that his new 'meds' were out of balance on that first visit. Sorted by the second.


Maybe the Mondi and IP 'bids' will result in a deal that suits the directors more than the shareholders but will be opaque and unquantifiable enough to distract too much close examination.

Maybe I'm too cynical.

[anhar] 17/4/2024 15:19

I agree with you but I thought you were suggesting earlier that a higher paper bid from MNDI is less likely due specifically to the lack of fixed value in such offers. What I'm saying is that this didn't stop IP from making its higher paper bid, nor SMDS from accepting it.

So I don't think that the lack of a clear price in an all-share bid in itself is likely to deter MNDI from coming back. They may or not but I don't think the indeterminate pricing of paper bids will be a factor in their decision, just as it wasn't for IP in launching the paper war.

[jeffian] 17/4/2024 15:06

But that's just my point, anhar. What does "a higher paper offer" mean when the value attached to it fluctuates on a daily basis? It's the bidder giving away a greater proportion of its own equity (which would probably upset its own shareholders, send the price down and reduce the 'value' of the bid!). Surely the only criteria the Board can look at is which combined entity will, via synergies, economies of scale, enhanced pricing etc, produce better growth and earnings per share.

[anhar] 17/4/2024 12:48

Jeffian: "...it's hard to see how a bidding war would work as the 'value' attributed to each bid is at the whim of the market..."

But that's exactly what happened when IP made it's paper bid to beat the MNDI offer, thereby creating the all-share bidding war. We're already in it. So it's entirely possible that MNDI could still come back with a higher paper offer, frustrating as it for us in having no fixed value. Hasn't bothered the three parties so far.

[davidosh] 17/4/2024 12:27

I think Jeffian has it spot on there. As no cash means we will fluctuate at the whim of the bidders share price. Those who want cash will just sell their shares. I prefer to stay invested in the sector and if IP ensure there is a listing here then that is preferred

[jeffian] 17/4/2024 12:19

Without any cash on the table, it's hard to see how a bidding war would work as the 'value' attributed to each bid is at the whim of the market. This is really just a merger rather than a takeover and the 'best' outcome is the one perceived to offer the greatest synergies and growth going forward. The packaging industry is one I want to keep invested in my portfolio so I will be keeping the shares for the long term.

[anhar] 17/4/2024 10:34

It's certainly possible. Whether it's likely is impossible to know at this stage.

[dssmith51] 17/4/2024 10:04

Is it possible or likely Mondi could still bid for DS Smith before the deadline dated of 23rd April?

[sharw] 16/4/2024 22:15

The Mondi deadline was extended to 5.00 p.m. (London time) on 23 April 2024.


Of Mondi it was announced - "Based on Mondi's closing share price of 1,381 pence per share on 7 February 2024 (being the day prior to the commencement of the offer period), the terms of the Combination would represent an implied value of 373 pence per DS Smith share". (RNS 7/3/24).

Mondi closed today at 1376.5 making its offer worth about 371.8p per smds share so they wouldn't need to increase that too much to beat the IP offer.

Given the uncertainty and the length of time it will all take and the price today being higher than needed for the next counter-offer I sold my holding today. Good luck to those still hanging on.

[kirkie001] 16/4/2024 20:57

Nicely added, sharw - appreciated. Probably pushes me to selling.... Do Mondi still have their original PUSU deadline?

[sharw] 16/4/2024 18:43

"So sale agreed at the equivalent of 415p". Kirkie01

Well, actually it pays to read it all-
"The terms of the Combination value each DS Smith Share at 415 pence
per share based on the closing International Paper share price of $40.85 and
£/US$ exchange rate of 1.2645 on 25 March 2024".

At the moment the IP share price is $36.0 and the exchange rate 1.24 so I make that a value of 373p per SMDS share. Hence the SMDS price in the 390s assumes either a counterbid from Mondi or a revival in the price of IP.

[tnt99] 16/4/2024 14:09

I'll take the divi and new company shares

[kirkie001] 16/4/2024 13:57

So sale agreed at the equivalent of 415p. Plus a c12p per share dividend that will be declared in September, paid in October..... doesn't look like it'll be around long enough to get the 6.3p per share interim that would go XD in December 2024.

So... sell now in the market and get c402p... vs hold; get 12p per share dividend, and then IPC shares worth 415p ish in December, but subject to ups and downs until then.

Call it 25p upside - or c6%.

Not sure what I'll do yet, having sold 50% in the 390p's... but I'll probably sell in the market....

[anhar] 16/4/2024 10:12

Your logic is correct betman, 415p is irrelevant and SMDS price should track IP shares using the stated ratio and prevailing FX rate, but as you say, SMDS is a little above the IP deal price and I guess the reason is that MNDI could still come back with a counter offer.

[betman] 16/4/2024 09:29

At last nights close IP were $36.77 x 0.1285 / 1.244 = 3.798
So 415p is now irrelevant (?) and price should track IP share price and $ rate
Current SMDS price is 399p so a bit of disparity
Any errors in this logic ?
I note Mondi is up today so market doesn't believe they will rebid

[yump] 16/4/2024 09:05

This might have been discussed earlier but just wondering whether we could get capital appreciation in IP shares, as they appear to only just be coming off the bottom (is the cycle near the bottom ?) - unless they’ve had a company specific issue thats dropped the share price.

It appears that apart from graphics paper, the industry is forecast to grow to 2026 - including some growth from movement from plastic containers to card based.

I can’t get a clear view on the cycle - anyone else got one ?

[davidosh] 16/4/2024 08:43

Mondi can still bid higher and now have a target that they will need to beat by at least 20p I suspect

[risenfall] 16/4/2024 08:26

Does this now mean that Mondi will walk away given board approval for the IP proposal?

[laurence llewelyn binliner] 16/4/2024 08:18

#Yump, that was the part I was waiting to find out, so I might be buying my shares back again, getting stiffed the -30% WHT is most unpalatable.

As part of the Combination, any New International Paper Shares issued to DS Smith Shareholders will be authorised for primary listing on the New York Stock Exchange. Subject to official notice of issuance, International Paper intends to seek a secondary listing of its shares on the London Stock Exchange.

[yump] 16/4/2024 08:14

London listing in the plan so removes the fiddling about overseas tax issue ?

[lyceeuk] 16/4/2024 07:21

Deal agreed 415p

[lyceeuk] 16/4/2024 07:19

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

16 April 2024

RECOMMENDED ALL-SHARE COMBINATION

of

DS SMITH PLC

with

[tnt99] 11/4/2024 18:30

435 mondi bid ??!!

[tnt99] 10/4/2024 21:18

Incoming repost me thinks from mondi you know it makes sense

[buyzantium] 08/4/2024 20:47

LLB - Thank you. Most helpful.