Smith (ds) Share Discussion Threads

[alotto] 16/2/2024 09:16

I think Barclays is hinting that Mondi may offer 420p.

[moorsie2] 16/2/2024 07:36

And good retail numbers for January should provide some confidence in this sector

[bigbigdave] 16/2/2024 07:23

BARCLAYS RAISES DS SMITH PRICE TARGET TO 420 (360) PENCE - 'OVERWEIGHT'

[meanreverter] 15/2/2024 13:08

Sun1950:

Your guess looks about right to me. I don't think that SMDS holders would be happy with a deal resulting in a meaningfully lower dividend. Based on 2023 payouts, a 2-for-7 offer would cut the dividend per SMDS share by only a smidgeon: from 18p to 17.89p.

As for my own modest holding in SMDS, I would refuse 1 for 4, think about 2 for 7, and accept 3 for 10.

[upsondowns] 15/2/2024 12:45

Mondi share price picking up a bit today. Their results will be interesting

[moorsie2] 15/2/2024 10:25

This day next week is the Mondi annual results.... So guess we will know within a week

[sun1950] 15/2/2024 10:09

My guess is 2 mondi for every 7 DSS if it was 1 for 3 that would be over the top and 1 for 4 wouldn’t be voted through by shareholders just a thought

[buyzantium] 15/2/2024 10:09

Quietly confident this will go through this time so the gorilla glue already applied.

[moorsie2] 15/2/2024 09:03

Time to stick or twist now for holders.

Take 316 by selling or hold knowing it if does not happen we could be back in the 270s and if it does happen we would be in the high 390s

[moorsie2] 13/2/2024 15:23

Elsa,

The cash distribution from the Russian sale I believe was considered essential to clean the portfolio and allow for like for like comparison.

Davy are modelling that a combined Mondi Smith will only have 1.5 times debt to ebitda profile

[elsa7878] 13/2/2024 14:32

"That number gives credence to Moorsie’s view of both the valuation range and that this offer has been a long time in the planning."

I'm not so sure. If it was then why did Mondi recently agree to a large shareholder distribution when there is a concern that they might be taking on too much debt from SMDS (£2 billion v £1.2 billion of their own)....

[anhar] 13/2/2024 13:27

I hold SMDS only for the divis as I'm purely an income investor, know little about this industry and don't want to, same with all my holdings. Thinking outside the box you could say, not wanting to get in too close. So it's in the long term hold income port as part of the wide diversification strategy I follow, not because I'm enamoured with packaging.

Have held for a while and even with the possible bid now in the price, it's still slightly below cost, not that I care much about prices. All about the divis for me, share prices matter little in my approach.

[moorsie2] 13/2/2024 12:51

Davy atockbrokers see the sweet spot as 400p per share for SMDS

They write that major shareholders on both companies see the compelling logic and need to do this deal

[ygor705] 13/2/2024 12:20

Some very good and informative posts on here over the past week or so. Like Jeffian, I only hold DSS because of PE and divi but I have a much bigger holding in Smurfit Kappa. I also believe that DSS is definitely in play and given that SK merged last year and was also the subject of an offer from one of the big US names some years before, the direction of flight in the sector looks reasonably clear. In my day, the received wisdom in the merchant banking sector was that starting bid premiums should be around the 25% level. DSS was around 280p when all of these shenanigans kicked off which gives an opening bid level of about 350p equivalent on that basis. That number gives credence to Moorsie's view of both the valuation range and that this offer has been a long time in the planning. We are perhaps safer than we think at current levels ie there might be more to come before the offer is formally announced.

[laurence llewelyn binliner] 13/2/2024 10:06

#Moorsie2, Mondi has until 7 March 2024 to either formalise this offer or withdraw, following UK acquisition regulations..

[moorsie2] 12/2/2024 17:00

Reality is, I do not see any other option for both set of shareholders than getting together here.

If they fail to do this deal then the outlook for the companies and share value is poor.

My bet is 400 is the full and fair value here and for those share holders who think they are giving up the cycle upside then they can remain holders of the new entity.

I would be extremely positive on the outlook if they came together. Mondi have the best mill assets and Smiths are the best box sellers

[bareknee] 12/2/2024 16:42

Buyzantium

I don't know if Packaging Europe has misquoted Jefferies or whether Jefferies has lost the plot but when the article says "The report asserts that DS Smith standalone shares have consistently traded above £3.50 in the last 12 months" it's plain old-fashioned wrong !

Sadly, we've very rarely been over that price in the last 12 months. I'd agree that, to appeal to shareholders, that any deal would have to value us above that sort of price, but the premise put forward in that article on share price is baffling, more so because the rest of the article makes a lot of sense !

[jeffian] 12/2/2024 16:32

After the takeover of RPC, I bought this as an alternative in the packaging market, not expecting it to set the world alight but attracted by the low PR ratio and the dividend. As it is, I'm only just back at breakeven now, so not getting overexcited by the figures being touted, particularly at the lower end. Having said that, if I was happy to buy and hold Smith, with an all-share deal I suppose I should be content to remain a shareholder in the enlarged outfit, effectively retaining my interest in Smith whilst gaining an interest in the Mondi business and any synergies flowing from the merger.

[moorsie2] 12/2/2024 15:12

Great analysis

hxxps://packagingeurope.com/news/what-would-a-merger-between-ds-smith-and-mondi-mean-for-the-packaging-industry/10978.article

[buyzantium] 12/2/2024 15:01

Packaging Europe has a report from Jefferies today, well worth a read. An extract from this lengthy report follows - The report asserts that DS Smith standalone shares have consistently traded above £3.50 in the last 12 months, so any potential offer would need to exceed the £3.50 threshold to appeal to most DS Smith shareholders. Preliminary discussions have ranged from £3.60 to £4.40.

[moorsie2] 11/2/2024 14:55

LLB good luck with your holdings.

The big value here is very industry specific - it's the concept of a balanced internal system. World class paper making capacity balanced off with guaranteed end markets due to their box plant capacity.

Up to now DSS are short ( ie more box capacity than paper) and Mondi are long ( more paper capacity than boxes)

Incidentically the most profitable and successful company in this space over the last 10 years, Snurfit Kappa, championed the concept of balanced vertical integration

[laurence llewelyn binliner] 11/2/2024 14:43

#Moorsie2, I look forward to watching it play out, I am long here but had already pencilled in to double down April 06th in the ISA, which may or may not go my way if the share price runs (or not)...

Economies of scale, amalgamation of some business functions, purchasing power going forward could add considerable savings for a company twice the size and taking out a competitor makes a lot of sense..

As highlighted by another contributor recently, SKG will be watching for sure.. :o)

[moorsie2] 11/2/2024 14:27

LLB - I would expect this is not a recent interest and has been worked on for at least 6 if not 12 months.

It would have been modelled through the paper cycle

The deal value comes from 3 things as far as I can see

1. Synergies, especially from virtical integration

2. Benefits on returns from a more consolidated market

3. Valuation multiples based in the benefits derived from 1 and 2

[laurence llewelyn binliner] 11/2/2024 14:15

#Moorsie2, interesting valuation, Mondi have shown an interest last week at 275 pence which is close to the 5 year low, 2024 profitability has scope to rise from lower energy costs coming in so perhaps there could be more headroom to their bid..

We will of have to wait and see what comes in, and how serious they are.. :o)