Further statement regarding possible offer for DS Smith plc
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND ACCORDINGLY THERE CAN BE NO CERTAINTY THAT ANY TRANSACTION WILL PROCEED
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Corrugated packaging solutions is a core component of DS Smith's business. Due diligence has confirmed
Commenting on the Combination,
Also commenting, the CEO-Elect of
The International Paper Board continues to consider M&A in a disciplined manner and believes an acquisition of DS Smith is aligned with
Expected Synergies
- 92%, or
$474 million (£376 million1) of cost synergies across the following sources:- 47%, or
$241 million (£191 million1) from operational synergies across the combined network of mills, box plants and global supply chain, including:- Integration benefit of balancing containerboard supply positions (approximately 500k to 600k tons);
- Freight optimization benefits; and
- Operational efficiencies across mill and box network from product and system optimization, and sharing technology expertise.
- 23%, or
$117 million (£93 million1) from overhead synergies by reducing duplicative corporate and business overhead expenses; and - 23%, or
$116 million (£92 million1) from operational procurement synergies from increased scale of theCombined Group .
- 47%, or
- 5%, or
$26 million (£21 million1) from capex procurement synergies, by leveraging increased scale of theCombined Group ; and - 3%, or
$14 million (£11 million1) of revenue synergies.
These synergies are expected to arise as a direct result of the Combination and could not be achieved independently of the Combination.
Aside from the oneoff costs referred to above, the International Paper Board does not expect any material dissynergies to arise as a direct result of the Combination.
This statement constitutes a Quantified Financial Benefits Statement under Rule 28.1(a) of the Code. The Appendix to this announcement also includes reports from
The International Paper Board believes these synergies will contribute to significant value creation for both DS Smith and
Plans for DS Smith's Operations & Headquarters
As part of the Combination,
Plans for Secondary Listing
As part of the Combination, any new
In accordance with Rule 2.6(a) of the
In accordance with Rule 2.5(a) of the
This announcement has been made by
This announcement is not an announcement of a firm intention to make an offer under Rule 2.7 of the Code and accordingly there can be no certainty that any transaction will proceed.
A further announcement will be made if and when appropriate. Capitalised terms used in this announcement shall, unless otherwise defined, have the same meanings as set out in the announcement by
Enquiries:
International Paper Company |
+1 901 419 1731 |
Mark Nellessen |
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FGS Global |
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+1 212 687 8080 |
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+44 20 7251 3801 |
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+44 20 7628 1000 |
Luca Ferrari |
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Important Notices
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the
Rule 26.1 disclosure
In accordance with Rule 26.1 of the Code, a copy of this announcement will be available at www.internationalpaper.com by no later than 12 noon (
The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
Other
This announcement and the information within it is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. In particular, this announcement is not an offer of securities for sale into
This announcement has been prepared in accordance with English law and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside
The distribution of this announcement in jurisdictions other than the
Forward Looking Statements
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of
These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. These statements are based on assumptions and assessments made by
Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aim", "will", "continue", "may", "would", "could" or "should" or other words of similar meaning or the negative thereof. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, economic performance, synergies, financial conditions, market growth, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of the operations of the
These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. By their nature, these forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this announcement may cause the actual results, performance or achievements of any such person, or industry results and developments, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. No assurance can be given that such expectations will prove to have been correct and persons reading this announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement. All subsequent oral or written forward-looking statements attributable to
The Annual Report on Form 10-K of
Quantified Financial Benefits Statement
Statements of estimated synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the synergies referred to in the Quantified Financial Benefits Statement may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. No statement in the Quantified Financial Benefits Statement, or this announcement generally, should be construed as a profit forecast or interpreted to mean that the
APPENDIX
PART A
Quantified Financial Benefits Statement
"
-
92%, or
$474 million (£ 376 million1) of cost synergies across the following sources:-
47%, or
$241 million (£ 191 million1) from operational synergies across the combined network of mills, box plants and global supply chain, including:- Integration benefit of balancing containerboard supply positions (approximately 500k to 600k tons);
- Freight optimization benefits; and
- Operational efficiencies across mill and box network from product and system optimization, and sharing technology expertise.
-
23%, or
$117 million (£ 93 million1) from overhead synergies by reducing duplicative corporate and business overhead expenses; and -
23%, or
$116 million (£ 92 million1) from operational procurement synergies from increased scale of theCombined Group .
-
47%, or
-
5%, or
$26 million (£21 million1) from capex procurement synergies, by leveraging increased scale of theCombined Group ; and -
3%, or
$14 million (£11 million1) of revenue synergies.
These synergies are expected to arise as a direct result of the Combination and could not be achieved independently of the Combination.
Aside from the oneoff costs referred to above, the International Paper Board does not expect any material dissynergies to arise as a direct result of the Combination."
The International Paper Board believes that the
Further information on the bases of belief supporting the Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.
Reports
As required by Rule 28.1(a) of the City Code on Takeovers and Mergers (the "Code"),
Copies of these reports are included in this Appendix. Each of
Bases of calculation of the Quantified Financial Benefits Statement
In preparing the Quantified Financial Benefits Statement,
The cost bases used as the basis for the Quantified Financial Benefits Statement are a blend of
For the potential synergies arising from the combination of group functions, organisation information was reviewed. The assessment and quantification of such potential synergies have in turn been informed by
Cost synergy assumptions were based on a detailed, bottom-up evaluation of the benefits available from elimination of duplicate activities, the benefits of combined scale economics and operational efficiencies arising from consolidation. In determining the estimate of cost synergies achievable through the combination of
Where appropriate, assumptions were used to estimate the costs of implementing the new structures, systems and processes required to realise the synergies.
In general, the synergy assumptions have in turn been risk-adjusted, exercising a degree of prudence in the calculation of the estimated synergy benefit set out above.
In arriving at the estimate of synergies set out in the Quantified Financial Benefits Statement, the International Paper Directors have made the following assumptions, which are outside the influence of
- there will be no material impact on the underlying operations of either the
International Paper or DS Smith as a result of the proposed transaction or their ability to continue to conduct their businesses; - there will be no material divestments made by DS Smith save as previously announced by DS Smith as at the date of this announcement;
- there will be no material change to macroeconomic, political, inflationary, regulatory or legal conditions in the markets or regions in which
International Paper and DS Smith operate that will materially impact on the implementation of the synergy plans or costs to achieve the proposed cost synergies; - there will be no material change in current foreign exchange rates or interest rates;
- there will be no material change in accounting standards; and
- there will be no change in tax legislation or tax rates or other legislation in the
United Kingdom orUnited States that could materially impact the ability to achieve any benefits.
In addition, the International Paper Directors have made an assumption within the influence of
In addition, the International Paper Directors have assumed that the cost synergies are substantively within
Important Notes
- The statements of estimated pre-tax cash synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the pre-tax cash synergies referred to may not be achieved, or those achieved could be materially different from those estimated.
- No statement in the Quantified Financial Benefits Statement, or this announcement generally, should be construed as a profit forecast or interpreted to mean that
International Paper's earnings per share in the full first full year following completion of the Combination, or in any subsequent period, would necessarily match or be greater than or be less than those ofInternational Paper and/or DS Smith for the relevant preceding financial period or any other period. - Due to the size of the combination and potential scale of the
Combined Group , there may be additional changes to theCombined Group's operations. As a result, and given the fact that the changes relate to the future, the resulting cost synergies may be materially greater or less than those estimated. - In arriving at the estimate of synergies set out in this announcement, the International Paper Board has assumed that there will be no significant impact on the business of the
Combined Group .
APPENDIX
PART B
Accountant's Report on Quantified Financial Benefits Statement
The Board of Directors
on behalf of
38197
The Directors
EC1A 1HQ
Dear Sirs/Mesdames,
Possible offer for DS Smith plc ("The Target") by
We report on the statement made by the directors of The Offerer (the "Directors") of estimated synergy benefits set out in Part A of the Appendix to the Rule 2.4 announcement dated
Opinion
In our opinion, the Quantified Financial Benefits Statement has been properly compiled on the basis stated.
The Statement has been made in the context of the disclosures within Part A setting out, inter alia, the basis of the Directors' belief (identifying the principal assumptions and sources of information) supporting the Statement and their analysis, explanation and quantification of the constituent elements.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in accordance with Rule 28 of the City Code on Takeovers and Mergers (the "Takeover Code").
It is our responsibility to form our opinion, as required by Rule 28.1(a) of the Takeover Code, as to whether the Statement has been properly compiled on the basis stated and to report that opinion to you.
This report is given solely for the purposes of complying with Rule 28.1(a)(i) of the Takeover Code and for no other purpose.
Therefore, to the fullest extent permitted by law we do not assume any other responsibility to any person for any loss suffered by any such person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.2 of the Takeover Code, consenting to its inclusion in the Announcement.
Basis of preparation of the Statement
The Statement has been prepared on the basis set out in Part A of the Appendix to the Announcement.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the
We are independent of The Offerer in accordance with the FRC's Ethical Standard as applied to Investment Circular Reporting Engagements, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We have discussed the Statement, together with the underlying plans (relevant bases of belief/including sources of information and assumptions), with the
We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Statement has been properly compiled on the basis stated.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the
We do not express any opinion as to the achievability of the benefits identified by the Directors in the Statement.
Since the Statement and the assumptions on which it is based relate to the future and may therefore be affected by unforeseen events, we express no opinion as to whether the actual benefits achieved will correspond to those anticipated in the Statement and the differences may be material.
Yours faithfully
APPENDIX
PART C
Report from
The Board of Directors
on behalf of
38197
Dear Sirs,
Possible offer for DS Smith plc ("DS Smith") by
We refer to the Quantified Financial Benefits Statement, the bases of belief thereof and the notes thereto (together, the "Statement") as set out in the possible offer announcement by
We have discussed the Statement (including the assumptions and sources of information referred to therein), with the Directors and those officers and employees of
We have relied upon the accuracy and completeness of all the financial and other information provided to us by, or on behalf of,
We do not express any opinion as to the achievability of the quantified financial benefits identified by the Directors.
We have also reviewed the work carried out by Deloitte and have discussed with them the opinion set out in this Announcement addressed to yourselves and ourselves on this matter.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of the Code and for no other purpose. We accept no responsibility to
On the basis of the foregoing, we consider that the Statement, for which you as the Directors are solely responsible, has been prepared with due care and consideration.
Yours faithfully,
1 GBP:USD of 1:1.2619 as at
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