Smith (ds) Share Discussion Threads

[alotto] 19/4/2024 12:46

SMDS share price will adjust whatever direction IP will take at the opening of the NYSE

[alotto] 19/4/2024 12:30

It would be a yes to the IP from me, being part of a group with operations and market in the US mitigates currency exchange,row material cost volatility, gives a steady income stream and more secure dividend.
When are the shareholders going to vote?

[energiser01] 19/4/2024 12:07

Well that’s a no vote from me then …..

[kirkie001] 19/4/2024 12:00

No - it wasn't a cash 415p bid - it was in IP equity, notionally valued 2 months ago at an exchange that would have been worth 415p at that time. Currently, that exchange value is worth (about) 364p.

[alotto] 19/4/2024 11:57

If IP offered 415p and now the share price is 350 we have a guaranteed 15% profit in the near term or am I wrong?

[kirkie001] 19/4/2024 11:44

... which looks life a value for the takeover at c364p for a DS Smith share. So if it's trading at a shade over 350p currently, then you're talking about a c 12-13p execution risk discount in the price to unwind.. plus a 12p dividend - or about 6-7% FV difference between buying DS Smith and buying International Paper shares direct on the NYSE.

Not much... hedgies and arbs will spot it and make the trade for the turn... but for private investors, unless you've a huge amount of capital to buy them and sell forward to lock it in, probably not worth the trade.... unless you'd be a buyer of International paper equity today, irrespective of the acquisition.

My tuppence, anyway...

[kirkie001] 19/4/2024 11:38

Price for international paper last night seems to have been $35.26 at the close in NYSE last night. Interested to see what it opens at given Mondi's announcement...

[laurence llewelyn binliner] 19/4/2024 11:37

IP have come back from USD41 to 35 today so their offer is not 415 anymore, it is pegged to their share price on closing of the deal and the price of their new paper issued..?

IF the IP deal falls over, for any reason, back to sub 300 pence..?

FY2023 results and dividend news due 20.06.2024

[spawny100] 19/4/2024 11:33

I'm considering the same now kirkie having also got out at 395 in case something like this transpired. Bird in the hand etc.

[kirkie001] 19/4/2024 11:32

Yep - very glad to have got out yesterday afternoon as opposed to today given the announcement! ;)

I suppose the slightly more relevant question is... is it worth buying back into SMDS at 350p (plus 12p dividend) as a route into International paper?

[laurence llewelyn binliner] 19/4/2024 11:16

#1Knocker, an exit at c395 pence yesterday looks well timed given the MNDI withdrawal, you nailed that one for timing.., I got the same price 2 weeks back, but now the cards are on the table and IP aim to keep a London listing, could be coming back in for more.. :o)

For each SMDS share 0.1285 new International Paper shares
FX of 1.2645
Valuation of GBP3.58 per share

[yump] 19/4/2024 10:58

I’m keeping mine because have too much in income stocks conducting business in the UK.

IP gives exposure overseas and in theory more stability, plus not having a major paper/card company in a balanced income portfolio would be daft.

[kirkie001] 18/4/2024 14:51

Ditto - and same price as you. 10 year holding; significant profit over that time.... now on to the next one.

Looking for 4%+ yield, with decent growth prospects - loaded up in the FTSE 100/250 high-yielders already, but if there's other decent ideas out there, I'm all ears.... ;)

[1knocker] 18/4/2024 12:04

I pulled the trigger at 398.04.
It looks as though i could have got a penny or two more, but the cash is in the bank and I can move on.

Good luck to all still in here.

[1knocker] 18/4/2024 10:34

Agreed, anhar. The question is, will the IP price rise (and with it the price here) if the deadline passes without any improved counter-bid, or will th price here fall to reflect the current IP price alone, without hope value for an improved buy out price?

The latter seems more likely to me, in this rocky market. Certainly on a risk /reward analysis, the downside risk of hanging on and seeing the price drop another 20p or more seems greater than the upside reward of any improved offer, which quite likely won't materialise and, if it does, is likely to be only a small increase.

The problem with hanging on and selling the IP shares we receive if and when the deal is concluded is that such a sale will incur FX charges, whereas a sale now is in sterling and will not.

I sold a third of my holding at 405.44. I wish now that I had then sold the lot, but its easy to be wise after the event.

[anhar] 18/4/2024 09:42

As I don't want either bidder's shares I'm going to sell in the market. So all I really care about now is choosing my exit point. A higher bid from MNDI would therefore suit me but I have no reason to assume this will happen. For the time being then, as their bid is recommended, the SMDS price is ruled by the fluctuating IP price and FX rate.

Additionally at present there is a premium because with IP at $35.06 and about $1.25/£, the bid is worth only about 361p and SMDS is currently 397p. This appears to be suggesting a higher bid may arise, but of course this can be wrong.

[jeffian] 18/4/2024 09:10

Makes entire sense, yump, (at least to me!).

[dssmith51] 18/4/2024 08:57

My thoughts completely on this thread. I think stick with this bid. If Mondi bids higher and pays a higher price, what is going to happen to the price of Mondi Shares? The higher the offer the bigger the offer the bigger the risk?

[yump] 18/4/2024 08:38

As jeffian posted, wanting to keep paper/card in a portfolio maybe simplifies the decision I think, whether its cash or equity, unless you don’t like the acquirer.

If you assume the state of the paper market has an equal effect on both companies, then it (just) boils down to synergies, cost savings and the combined business being able to ditch anything thats not viewed as having a sound future.

So you could get an uprating of IP later, if the market likes progress, so you’ve effectively bought it a bit cheaply.

If that makes sense.

[mcunliffe1] 17/4/2024 16:55

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 14:19

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 14:06

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 11:48

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 11:27

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