Smith (ds) Share Discussion Threads

[alotto] 10/3/2024 20:51

Bare knee, I know that, I read it. But how did they work out that 46% of the two combined companies is worth 373 for existing Smith shareholders?

[bareknee] 10/3/2024 20:37

"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 and a premium of 33 per cent. to DS Smith's closing share price of 281 pence per share on 7 February 2024 (being the day prior to the commencement of the offer period);

[alotto] 10/3/2024 20:30

How did they work out 373 then?

[elsa7878] 10/3/2024 20:14

If you read the terms it’s extremely clear where the 373 comes from. Suggest YOU read it again.

[sun1950] 10/3/2024 20:07

The 373p comes from the Mondi price of 1400 x 4 divide by 15 then you get the 373p. So if Mondi price drops then DSS price will fall which is what happened late on Friday. The DSS price is now governed by the Mondi price subject to the discount as the deal has still to be agreed by the BOD and shareholders. So if you take the closing price on Friday 1350p that equates to 360p DSS was 342p so the discount stands at 18p that will disappear if the deal is agreed. So the 373p is not guaranteed

[alotto] 10/3/2024 19:32

Else, unless you have a specific question, read again with more attention.

[elsa7878] 10/3/2024 19:04

You've totally lost me…

[alotto] 10/3/2024 18:48

Here are some maths:

The market cap of Smith DS on the 8th of Feb was about £3.9B (share price of 280p), Mondi was about £5.9B.

The combined market cap is £9.8B. The 46% of this figure is £4.5B, which equates to a share price of £3.25 (4.5B divided by 1.38B shares in issue).

I am not sure where the 373p valuation comes from.

The claim that Smith shareholders will be better off by 33% is highly speculative and frankly pathetic. This is not a cash offer and the value of the combined company will be determined by the market. I hope they did not negotiate the value of the businesses on the valuation of the companies at the close of a specific trading day, which is quite unfavorable for Smith. What if they negotiated a deal when Smith was valued at £5+?

[mcunliffe1] 10/3/2024 17:16

I liked the report in the financial section of the Friday Daily Mail. Whilst the reporter was suggesting there are savings to be made (synergies was the word) by the merger the management haven't determined what those savings are and hence haven't communicated such to us.

The report did say that Mondi shareholders would get 54% of the merged entity and DSS shareholders would get 48%.

I think the reporter has a bright future either at the BofE or in Rachel Reeves' office later this year :-)

[sun1950] 10/3/2024 15:28

Just a thought but this would be my understanding Mondi will offer 4 shares for every 15 DSS which will increase Mondi share issue by 360mn to 800 mn shares which is why DSS price is determined by Mondi price the next question is what will be the profit and EPS of the merged company if we say £1bn then EPS will be 125 and if the sell on the same as Smurfit say 11 times that would be 1375 slightly above the present price there are other things which determine a share price these are just my thoughts and would be interested in other opinions also

[elsa7878] 08/3/2024 12:56

Because Mondi shares are down, it's not a done deal and there is the question of timescales if it is completed.

[justiceforthemany] 08/3/2024 12:55

Why isn't this trading at 373p?
Steep discount??

[moorsie2] 08/3/2024 09:51

There is no credible counter bidders

Stora is not in this sector
West rock is being taken over by SKG
SKG foccussed on Westrock
IP is cleaning itself up
PCA have shown no sign of going outside USA
Nothing from Japan or China credible in this European space

[kinwah] 08/3/2024 09:38

I think there are signs of institutional buying now with me being able to sell CFDs above the quoted offer price. On a medium term view (1-2 years)the prospects look good for the combined business with decent dividend prospects.

[kinwah] 08/3/2024 09:11

Obviously in the current climate of competing bids thoughts turn to possible counterbidders. I am no expert but maybe Stora Enso see this as an opportunity. Other possibilities could be IP and Westrock or the Japanese Oji. As others have said Mondi is the best match but you never know these days how bids will turn out. I've been reducing my CFD position in SMDS this morning but I'm keeping my direct holdings for now.

[moorsie2] 08/3/2024 09:02

View of Davy stockbrokers and one of the best Analysts in the sector...

Mondi has agreed in principle to a 373p all share offer for DS Smith to
create a vertically integrated European packaging leader. Our merger
model (available on request) indicates that the offer is 1) 20%+ EPS
accretive to Mondi in CY25E and 2) delivers 12% CY25E transaction
ROCE. Anticipating limited regulatory hurdles or third-party interloper
risks, we believe the proposed merger benefits both Mondi and DS
Smith shareholders.

[laurence llewelyn binliner] 08/3/2024 08:39

Interesting, so where is the trade here, keep the SMDS shares already owned and buy MNDI on their drop, then hold them both through to the merger completes.. :o)

Enjoy the dividends of the combined entity going forward..

[spawny100] 08/3/2024 08:25

Ah yes thanks makes sense.

[spawny100] 08/3/2024 08:15

Strange I thought it would go straight up to much closer to 373.

[1tx] 07/3/2024 22:29

Whilst others,in particular International Paper,might be interested they are far more likely than Mondi to face competition issues from EU & other regulators due to overlap in businesses.I will probably hold & accept the offer at least for the bulk of my holding;it seems reasonable taking into account that I doubt if Mondi shareholders would allow more as their share price has also fallen.
A combined Mondi Smith business would be a strong operator.

[cardinal3] 07/3/2024 21:09

Adding cash in lieu of the final dividend could do the job. Year end is June so by the time this deal could be done we'll have had a full year's trading and shareholders should get the benefit.

[moorsie2] 07/3/2024 21:04

No other company can create the synergies that Mondi can with Smiths.

Hence why I do not expect a counter bidder

IP or PCA are waiting in the wings to pick up Mondi Smith in 2 years

[essentialinvestor] 07/3/2024 20:54

Mondi gets a kicking tomorrow?.

Best guess only.

[ygor705] 07/3/2024 20:49

The question in my mind now is whether the stated terms are sufficiently good from the DSS perspective for the deal to get done. The sector is consolidating internationally and I'm wondering if the announcement may shake out other interest. A higher offer from a US source perhaps? DSS has been such a dog performer over the years that somebody ought to be able to wring out a bit of shareholder value by way of outright acquisition.