Smith (ds) Share Discussion Threads

[moorsie2] 27/3/2024 20:20

Nice bounce back in IP share price today by over 3%

[laurence llewelyn binliner] 27/3/2024 18:05

#Peart, it is a real PITA, but if you have an ISA with a broker HL/ii/AJB they stop you -15% WHT but if you hold with a bank, Barclays for sure they stop you -30% WHT even with a W8-BEN in place and active, and leave the holder to figure out how to reclaim it (with no advice) or just flush it..

Could we see 400+ pence tomorrow..? MNDI have until 04th April to confirm/improve or ask for another extension..

[bareknee] 27/3/2024 17:36

I think Mondi will struggle to improve their offer, or, if they do, then the market will think they're overpaying ... which would hit their share price and then effectively bring the offer down to something closer to the 373p equivalent.

Obviously there's a possibility that what I've typed is rubbish or someone else entirely will step in, but, on the grounds that there's a small possibility that neither offer will go through I decided to reduce my holding this afternoon by about a half and wait and see what happens next.

Having about a third of my holding liable for CGT and already having used my CGT allowance this FY came into consideration too.

[spawny100] 27/3/2024 16:34

Similar to others, see limited upside from here (and possible downside if bids fizzle out) so am out and added proceeds to HBR and HSBC holdings.

[mcunliffe1] 27/3/2024 16:25

I wanted to be a long-term holder but like you anhar, I'll be out at some point. The issue is to find a better place than here.

[phillis] 27/3/2024 16:08

There is going to be an improved offer for sure

[anhar] 27/3/2024 15:18

I'm a long term holder of SMDS for income and also don't want Mondi or IP shares so I'll probably sell in the market at some stage. Plenty of time though so no hurry.

[peart] 27/3/2024 13:40

Laurence, I think if an investor completes the W8-BEN form that the 30% can be avoided inside an ISA.... But the investor won't be able to reclaim the15% as there's no tax in an ISA.
Anyway, that's my understanding, (but I might be wrong) making USA dividend paying stocks somewhat unattractive within an ISA.

[spawny100] 27/3/2024 13:39

Yep. I used to hold DEC in an ISA. Complained to iweb that they withheld 30% and they basically said tough that's the way it is. So I no longer hold them.

[peart] 27/3/2024 13:35

Interesting Laurence. I don't doubt you but I wonder how some withhold 15% and some withhold 30%, as that seems wrong. As said I'm fully aware of the withholding tax and the dual treaty and appropriate tax forms, but that seems harsh on certain ISA accounts....

[meanreverter] 27/3/2024 13:18

I hope that IP drives Mondi to raise its bid — but also that IP folds in the end. If Mondi folds and IP wins, I will dump my SMDS holding at whatever price I can get, so as not to pay US withholding tax (15% in my case).

[laurence llewelyn binliner] 27/3/2024 12:37

#Peart, no quite so, some ISA providers here are stopping 30% WHT (Smart Investor) even with a W8-BEN active, some stop 15% (ii), I try to avoid foreign parent companies listed in the US for this reason now having been caught out before, SIPP holders are zero rated though..

MNDI are UK listed, although they pay a dividend in EUR so this would be preferable for the UK ISA holder, and they are out in front in terms of having an agreement in principle already, but they might need to raise their price a little more now.. :o)

[peart] 27/3/2024 12:08

You are safe within a SIPP, infact, as long as you complete the W-8BEN form, but ISA'S are not recognised so Uncle Sam will keep the 15% in these instances.

[peart] 27/3/2024 12:06

US withholding tax is 15% on dividends.

[peart] 27/3/2024 12:05

It's fine if held outside an Isa as you can offset the withholding tax against your tax return as the US and the UK have a dual tax treaty. You obviously need to complete the W-8BEN form to get the 1042S certificate.

[meanreverter] 27/3/2024 11:20

For most UK holders of SMDS, the IP bid is unattractive from an income perspective, because of the US withholding tax of 15% or 30% on dividends.

[peart] 27/3/2024 10:22

IP offer makes the dividend the same with a higher base price - so a lower dividend yield for the combined group, but net the same for DS Smith shareholders as at today.

[peart] 27/3/2024 10:18

I'd imagine the two bidders are kept in the dark with DS Smith/advisers negotiating independently with the two teams/their advisers. If you want it you have to pay - end of. With two bidders I suppose they both have to table the maximum they are prepared to offer, and then no doubt the advisers of DS Smith will try to squeeze out an extra few pence, as that's their job.... Also, the two bidders don't know if another bidder might come in with a knock out offer. Anything is possible.
Simply, if they want it, someone is going to have to pay, that is unless Mondi are simply prepared to walk away. Even if they were that will not be conveyed to International Paper, for obvious reasons.

[peart] 27/3/2024 10:11

I think human nature kicks in here, with emotion and testosterone involved. Financial discipline will be there, but so too will the desire to win. My bet is there'll be a knock out bid presented and it'll be game over. Sometimes people simply have to pay and it's not as if DS Smith is expensive at a p/e of 8.37 currently (ex HL) (10.74 on ii and AJBell). Just depends upon how the negotiations go... £4.5?... maybe a bit more?? We'll see.

[jeffian] 27/3/2024 10:11

Maybe one of the bidders will have to throw some cash in to anchor the price. Hard to assess the value of all-share deals in the short term.

[moorsie2] 27/3/2024 09:35

Well Mondi have until 4th April

They have an avenue to go down if they choose, to say the synergies found are greater than they originally considered and therefore allow them to up the offer without affecting their financial discipline :)

[laurence llewelyn binliner] 27/3/2024 09:00

So will this force the hand of the MNDI BOD into raising their offer already agreed in principle or are they more likely to stand back and watch the IP bid come in..?

A very interesting watch for a month now.. :o)

[moorsie2] 27/3/2024 08:50

The big changing factor was Sutton being replaced by a Private Equity guy as CEO at IP

[ygor705] 27/3/2024 08:30

Moorsie: The problem with letting a competitor have a free field of fire and then picking up the merged entity is that you don't have control of what goes on in the interim. I saw your post on that one but was never overly convinced by the argument. Anyway, we'll both do well out of this development which could now take some time to sort out.

[moorsie2] 27/3/2024 07:22

Hi Kin-wah

The synergies on offer to IP are vastly inferior to Mndi

Also there may be competition issues and remedies needed due to some USA overlap

Thirdly the CEO got his fingers and reputation severely burnt by an unsuccessful bit for SKG.

However in the last two weeks IP unexpectedly announced a new external big hitter as CEO. So this looks like his unencumbered play.

The upshot is IP have created an unexpected bidding war. The strong industry view was let Mondi do the heavy lifting of DSS integration and then IP pick them up in 2 years....

But the next guy seems to want to make instant waves....