Smith (ds) Share Discussion Threads

[betman] 21/6/2024 14:05

anI cannot find nay info on their takeover bid on the Suzano website. Is there a source of information on what's happening ?

[buyzantium] 20/6/2024 14:54

Just search 'DS Smith news' it should be there.

[alotto] 20/6/2024 14:51

Can you share the article?
We will trade around 450 soon

[buyzantium] 20/6/2024 14:36

Guardian article today - The boss of the FTSE 100 company DS Smith has said its £5.8bn takeover by a US rival is going at "absolutely full steam", despite concerns it could be derailed by another packaging sector merger.Miles Roberts, DS Smith's chief executive, said merger work with International Paper was "going very well" and that he definitely expected the deal to complete.

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[santar] 19/6/2024 23:16

Don't forget Mondi with their 373p offer. Shouldn't this underpin the SP?

[pj fozzie] 19/6/2024 17:16

The calculation for takeover price is dependant on two changing values: The IP share price and the £/$ exchange rate.

Right now IP = $46.25
And £1 = $1.27

Therefore the current IP share price in £ is 46.25 divided by 1.27 = £36.42

Since the takeover offer of DS Smith is 0.1285 IP shares for each DS Smith share,

Then the current takeover value of DS Smith is 36.42 x 0.1285 = £4.68

This is a 33% uplift on today's closing price.

If we knew the DS Smith takeover was gonna happen, then buying at this price would be a no brainer.

However there are two big risks:

1) The Suzano takeover of IP proceeds.

2) The Suzano takeover fails and the IP share price drops, because it's current price is simply being supported by takeover speculation.

Personally, I think number 2 is more likely - but I don't see a 25% drop in the IP share price, therefore I believe DS Smith is good value at the current price. If number 1 occurs, then I'm also happy, I was already a DS Smith holder before all this takeover stuff happened and the fundamentals haven't changed. I'm happy to hold and maybe add in the future. My investment philosophy tends to be buy and hold forever - living off the dividends.

Cheers,
PJ

[alotto] 19/6/2024 10:48

Yes @ about 445p.

[mjcferguson] 19/6/2024 10:37

Am I correct in thinking that the increase in IP share price to $46 means that the effective takeover price is well ahead of the current dsSmith share price.

[alotto] 19/6/2024 07:55

I think Suzano has made that quite clear. They don't want SMDS

[buyzantium] 19/6/2024 07:32

How sure are we that DS Smith will be excluded should a successful bid be made by Suzano.

[alotto] 11/6/2024 07:03

2 weeks is a lot in the midst of a takeover. But hopefully you're right

[bell011] 10/6/2024 20:13

Top bigwigs from IP came over to the flagship Exning factory a couple of weeks ago, with Miles Roberts to meet and greet..... allegedly extremely impressed with operations and fully committed to Smiths deal and reiterating that the brazilian interest is a NO

[alotto] 10/6/2024 20:05

Kinwah I didn't know about this but it sounds entirely possible.
This is taking longer than I was expecting. I envisioned a no deal situation full stop

[kinwah] 10/6/2024 15:04

I find it very interesting that Suzano is talking to 3 Japanese finance houses regarding its financing. That suggests to me that part of Suzano's plan would be to offload some of IP's assets on to Oji Paper perhaps to avoid anti-trust issues. Why else would Japanese banks be looking to help a Brazilian company take on crazy levels of borrowing?

[moorsie2] 10/6/2024 07:00

Brazilian pulp and paper giant Suzano (BCBA:SUZm) is reportedly looking to secure up to $19 billion in debt to potentially acquire International Paper (NYSE:IP), according to Bloomberg.

Analysts from Jefferies are predicting a potential cash offer for IP in the range of $54-57 per share, a figure that aligns with previous investor expectations. However, IP's board may value the company significantly higher.

Suzano's strategic move is geared towards creating a global industry leader with robust cash generation capabilities to expedite debt reduction. The company is also nearing the completion of a $4.2 billion project to boost its hardwood pulp capacity, which is expected to further enhance its free cash flow.

The reported $19 billion debt that Suzano aims to raise implies a potential acquisition price for IP in the $54-57 range. This would increase Suzano's projected leverage to 5.9 times its 2024 estimated earnings or 5.3 times its 2025 estimates, based on consensus predictions for Suzano and IP model forecasts.

Given IP shareholders' push for the company to divest its Cellulose business, it seems unlikely they would accept stock in a Brazilian pulp company. This is particularly true given Suzano's falling share price since expressing interest in IP.

Therefore, the news of Suzano's potential $19 billion debt aligns with the expectation that any offer below mid-$50s in cash would likely be rejected.

If the $50 per ton increase in linerboard holds, it could boost IP's EBITDA by approximately $550 million or around 26%. Using this framework, IP's shares could reach close to $56, even before considering any uplift from Silvernail's commercial and operational initiatives.



In an optimal scenario, shares of IP could approach $90 if IP manages to close the gap on revenue per ton and the $50 per ton increase sticks.

However, with mixed investor sentiments regarding the SMDS deal and a potential mid-$50s cash offer, deciding on an equity component becomes more challenging. Especially given that Suzano's stock has dropped by over 20% since initial reports of its interest in IP surfaced, while IP's stock has rallied.

Analysts at Jefferies have retained their Buy rating on International Paper (NYSE:IP) with a price target of 57

[tnt99] 06/6/2024 08:50

Well this won't go through as the shares are currently 44 dollars

[ygor705] 05/6/2024 20:18

Over the past few days most of the trading here seems to have been happening after hours and in very large soze. Given the volumes involved it looks to me as if some significant positions have been created. Given the relatively modest share price changes I'm wondering if these 'bets' are being hedged somewhere.

[moorsie2] 29/5/2024 13:55

SAN FRANCISCO, May 24, 2024 (PPI Pulp & Paper Week) - Brazilian firm Suzano, the world's largest market pulp producer, on May 22 confirmed interest in International Paper (IP) assets in a regulatory filing. Its statement came about two weeks after reportedly making an informal all-cash offer to acquire IP for $42/share in a deal that would be worth almost $15 billion (P&PW, May 10, p. 1).

"However, it reiterates that, up to the moment, there is no agreement, binding or otherwise, nor any decision or deliberation by the company's management regarding a potential operation that meets the minimum materiality required to qualify as a material fact," Suzano said in the release.

Suzano is in talks with banks including Mizuho Financial Group, Nomura Holdings Inc., and Mitsubishi UFJ Financial Group to finance its potential bid, according to a Bloomberg report that cited people familiar with the matter. Suzano is reportedly mulling a cash-and-stock offer for all of IP's assets, with a potential funding arrangement with banks similar to one Suzano inked in its $11 billion acquisition of Fibria in 2018.

When talk was out about Suzano making a $42/share offer, contacts at the time said IP would likely reject it, because IP viewed that offer as too low and it would have to abandon an agreement to acquire packaging firm DS Smith in a $7.2 billion deal (Apr. 19, p, 1).

"As industry conditions continue to improve, IP will come out of a cyclical bottom for earnings," IP previously said in a May 7 statement. "The company is also focused on completing its previously announced combination with DS Smith, which offers a unique and highly compelling opportunity to create significant shareholder value above its base plan."

With DS Smith, IP would be the second largest containerboard and corrugated box company in Europe. and would remain as the largest in containerboard and boxes in North America.

Suzano has 10.89 million tonnes/yr of pulp capacity at eight mills in Brazil, mostly bleached eucalyptus kraft (BEK) as well as a small amount of eucalyptus-based fluff pulp, which it calls Eucafluff and expects to grow in the coming years.

IP is the world's largest fluff pulp producer with 2.7 million tonnes/yr of total market pulp capacity at eight mills in the US and Canada. In addition to fluff pulp, it makes northern bleached softwood kraft (NBSK), southern bleached softwood kraft (SBSK), and southern bleached hardwood kraft (SBHK).

IP's No. 1 containerboard ranking in North America stems from its 29-30% capacity share in the regional segment. IP's deal to buy DS Smith, the second largest packaging company in Europe behind Smurfit Kappa Group, is expected to close by the fourth quarter.

An industry analyst this week said rather than acquiring IP as a whole, a second possibility could be carving out its global cellulose fiber div, which it calls its market pulp assets. IP told analysts in a call this week that it expects to make a decision about whether to keep its Global Cellulose Fibers unit within six to 12 months.

"Earlier today, we had the opportunity to catch-up with new IP CEO Andy Silvernail for an update call with sell-side analysts now that he is officially in the chair," Truist Securities analyst Michael Roxland said in a May 22 research note to clients.

"Mr. Silvernail noted that IP is not actively engaged with Suzano. At this time, IP remains focused on completing its acquisition of DS Smith. That said, Mr. Silvernail noted that no portion of IP is a sacred cow, including Global Cellulose Fibers (GCF). While he has thus far primarily concentrated his efforts on Industrial Packaging (containerboard and boxes), Mr. Silvernail recognizes that there is work to be done in GCF with the company prepared to make a decision on whether GCF remains a part of the portfolio sometime within the next six to 12 months."

[moorsie2] 28/5/2024 14:50

It doesn't have the balance sheet to stretch to this.

It did when the company was in low 30s at the bottom of the cycle and no sign of leadership change.

Their opportunity has passed

[buyzantium] 28/5/2024 14:47

Should have mentioned the following which in my view must make a cash takeover by Suzano even less attractive for future prospects and stability - Suzano SA, the world's largest producer of pulp, is in talks with banks including Mizuho Financial Group, Nomura Holdings Inc. and Mitsubishi UFJ Financial Group on the financing of a potential bid for US packaging giant International Paper Co., according to people familiar with the matter.

[buyzantium] 28/5/2024 14:20

After enthusiastically extolling the virtues of a future merger later this year with DS Smith by International Paper it would surprise me if they choose to walk away for a few extra dollars from the present Brazilian suitor. Getting rich quick is a poor decision in comparison to a longer term view of growth potential and more honourable course of action.

[moorsie2] 28/5/2024 11:17

They don't have the balance sheet to offer much more than the touted 42 per share

Also IP is a US institution. It would never be allowed to be swallowed up by a smaller Brazilian player

With a new external CEO and two new NEDs there is no way

[dssmith51] 28/5/2024 10:59

alotto it was pleasing to read your comment. $50 would not cut it. $55 may be too higher price to offer. Hopefully the interested party will end up walking away so that IP is able to finalise the buy out with DS Smith.

[alotto] 28/5/2024 07:25

DSSmith51 at what price? 50 dollars? 10% premium for a company paying 5% dividend. That's would be insane. But short term greed is a thing, so shareholders may accept a pitful offer.