Smith (ds) Share Discussion Threads

[spawny100] 26/3/2024 18:00

Let the bidding war commence!

[laurence llewelyn binliner] 26/3/2024 17:45

Nice run this week here, we could/should soon see the implied 373 pence valuation MNDI put on the deal, but then there are the economies of scale and cost savings to consider..

Add to that, the terms of the International Paper proposal represent a value of 415 pence and premium of 48 per cent to DS Smith's closing share price of 281 pence on 7 February 2024..

What a turn of events.. :o)

[ottoman1453] 26/3/2024 14:43

With price action moribund for seemingly ages, this is beginning to look interesting.

[moorsie2] 26/3/2024 08:48

Bit by bit

Week by week

:)

[moorsie2] 20/3/2024 09:54

This is a patient play

The merger is compelling and will bring great benefits to sharehders. Scale is everything in the sector

[taster] 15/3/2024 16:06

Expanding a bit on m-rev, with currently 441.41m Mondi in issue, Mondi would issue an additional 46/54 * 441.41m so approx 376.02m Mondi to give to current SMDS shareholders in return for the SMDS stock. With 1377.4m SMDS issued, this means 376.02/1377.4, approx 0.273 Mondi per SMDS share...with Mondi price they used at announcement of 1381 the offer would be equivalent to 377....so as m-rev says maybe they rounded for the announcement or I wonder if there is something on the cap table which slightly alters the shares in issue should a transaction take place....anyway for now between friends, the theoretical price of SMDS = Mondi price * 0.273 and the difference between this and the actual SMDS price reflects the risks of the deal not closing etc.

[ygor705] 14/3/2024 13:38

Agree with the last two posts. That said, I do wonder whether the merged entity will be any better managed for shareholders than DS has been.

[jeffian] 13/3/2024 23:06

Agreed, alotto. This is a merger, not a takeover, and for those who wish to sell, I doubt they'll know what they'll get in cash terms until completion, as I think you(?) said previously. Personally, I will be happy to hold shares in the merged entity and see where it goes.

[alotto] 13/3/2024 19:06

Share share price doesn't matter anymore. What matters is the % split. The merge is not done on temporary volatility but on the estimate of potential for growth of the merged compared to the individual companies. The deal is not being made to please day traders and speculators.a 46/54 split sounds reasonable to me. The management has to work out what opportunities the merger will brimg about. Drop your hopes to buy for 340 and sell for 370.

[sun1950] 13/3/2024 18:51

If Mondi share price keeps falling then the merger will be in doubt if the offer was say 340-350p how many shareholders would vote for it

[alotto] 11/3/2024 17:19

Thanks for your inputs Tetleys and MCunliffe.

In my calculation I would not take into consideration the current share price and the number of the shares in issue in the merged company (as this can be assigned arbitrarily). The new company may have 1 Billion shares or 200m shares, who knows!
Lets assume for simplicity the merged company will have 1 billion shares in issue. 460M of these new shares will belong to the current SMDS shareholders, the 460M shares will need to be distributed among the 1.38B shares in issue for SMDS. This will equate to about 0.33 new shares for each of the existing SMDS share.
Similarly for MNDI this figure will be 1.27.
Making the figures to integer numbers: if you hold 11 shares in SMDS you will get 1 in the merged company, if you have 3 shares in MNDI you will get 1 in the merged company.

[essentialinvestor] 11/3/2024 11:55

The initial sell off in Mondi was less than I expected, but it is now beginning to be hit harder

Mondi is currently a modestly geared business, SMDS not so much.

Unsurprisingly the market has some doubts.

[tetleys dad] 11/3/2024 11:27

A newbie to this investing lark so I hope I’ve done this correctly!

There are ~ 1,818m shares combined for SMDS & MONDI. If these are split 46:54 in the new entity then 836m are SMDS and 982 Mondi. Dividing these proportions by the current split of shares (1,377m and 441m) gives the proportions 0.607 and 2.225. Divide these proportions by the lowest (0.607) gives a ratio of 1:3.663 which approximates to 4 SMDS shares to 15 (14.663) MNDI. If you gross these figures up then you get 272.98 SMDS shares and 1,000 for MNDI.

Happy to be corrected!

[alotto] 11/3/2024 10:38

MCunliffe1 How do you get the 273 Mondi shares per 1000 SMDS shares then? If you don't know, then it was not 'broken down' enough. At least it isn't for me. I am not saying that the calculation is wrong. But I would like to understand it.

[mcunliffe1] 11/3/2024 10:16

I think meanreverter has pretty much 'broken it down'.

Thanks m-rev.

[alotto] 11/3/2024 09:43

meanreverter what is the breakdown of your calculations?

[1deadcat] 11/3/2024 09:14

So, 1 Mondi share for every 4 DS shares held is about right?

[meanreverter] 11/3/2024 08:57

There are 441,412,530 Mondi and 1,377,451,807 SMDS shares in issue. If the 46:54 ratio is accurate, then SMDS shareholders will get 273 Mondi shares per 1000 SMDS shares held. If the calculation is based on the Mondi reference share price of 1381p and corresponding claimed 373p valuation of SMDS by the offer, then SMDS shareholders would get a bit less: namely 270 Mondi per 1000 SMDS.

Traditionally, share-swap offers are not presented in such decimal form but rather as simple fractions. Thus, we might expect a 3-for-11 (0.2727...) offer, based on the 46:54 ratio. The 373p calculation doesn't match any simple fraction closely. The nearest I can find is the slightly awkward 7 for 26 (0.2692...).

[alotto] 11/3/2024 08:29

If the share price of the combined company stays in the region of 1380p, how many shares there will be in issue?

[1deadcat] 11/3/2024 08:08

Does this mean that DS holders get 1 share in Mondi for every 4 shares (approx) they hold? Or am I misinterpreting this?

[elsa7878] 11/3/2024 07:54

No it's not.

If at completion the Mondi share price is £13.81, the date when they said they intended to offer, then DS shareholders will get Mondi shares which would be the equivalent to 373 per DS Share. Ie They have said that is what they value DS shares at now.

Obviously if Mondi shareholders hate the deal and their share price falls (or the market generally falls) DS Shareholders will get less. If on the other hand the Mondi share price is higher than 1381, DS shareholders will get more than 373 (equivalent).

The point is that it is undetermined as it is all in shares and no cash, but the negotiation was in the 2 boards agreement to split the enlarged company 54/46.

[alotto] 11/3/2024 06:03

"The actual value per DS share will only be determined..." This is exactly my point.

"Clearly there is an additional discount at the moment ..." If that's the case, what is the fair value for Smith? As far as I can't tell, the 373 figure is a made up number.

[elsa7878] 10/3/2024 22:48

The actual value per DS share will only be determined on the day of completion by reference to the Mondi share price such that the respective market values are 54/46%.

In the meantime the DS price will follow the Mondi share price in which ever direction it moves.

Clearly there is an additional discount at the moment due to non-completion risk, regulatory risk (though minimal apparently) and the time to completion.

[jeffian] 10/3/2024 22:34

You can't work it out between two constantly shifting variables. Have they stated anywhere exactly what the 'offer' is (as in how many Mondi shares we are being offered for our SMDS shares)?

[elsa7878] 10/3/2024 22:01

See if you can work it out....