DEFA14A: International Paper Urges Shareholders to Approve DS Smith Acquisition in Upcoming Vote

International Paper is seeking shareholder approval for the issuance of new shares to finalize its acquisition of DS Smith Plc, aiming to create a global leader in sustainable packaging.

Summary

• International Paper (IP) is seeking shareholder approval for a proposal to issue new shares of common stock.
• This issuance is in connection with the pending acquisition of DS Smith Plc.
• A special meeting of shareholders is scheduled for October 11, 2024, to vote on the proposal.
• Management and the Board of Directors are urging shareholders to vote in favor of the proposal.
• The acquisition aims to create a global leader in sustainable packaging solutions, enhancing IP's presence in both North America and Europe.
• The company anticipates significant synergies of at least $514 million and expects the deal to be EPS accretive in the first year.
• The combined entity is expected to have approximately 90% of its revenue from sustainable fiber-based packaging.
• DS Smith's European sales in FY23 were $9.4 billion, while IP's European sales were $1.5 billion.
• The acquisition is expected to strengthen IP's customer value proposition through enhanced offerings, innovation, and geographic reach.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook regarding the acquisition of DS Smith, highlighting expected synergies, EPS accretion, and the creation of a global leader in sustainable packaging. The management's enthusiasm and the call for shareholder approval contribute to a favorable sentiment.

Positives

• The acquisition is expected to create a global leader in sustainable packaging solutions.
• The combination is projected to generate significant synergies of at least $514 million.
• The deal is expected to be EPS accretive in the first year.
• The combined company will have a strong investment-grade balance sheet.
• The acquisition will enhance IP's ability to serve global customers with a broader product offering.
• The deal will increase IP's exposure to the fast-moving consumer goods and e-commerce segments.
• The combination will create greater opportunities for cross-selling products and services.

Risks

• The document contains a cautionary statement regarding forward-looking statements, noting that actual results could differ materially due to various factors.
• These factors include the ability to consummate the acquisition and achieve expected benefits, climate change risks, litigation, indebtedness, economic conditions, and cybersecurity risks.
• The company's ability to meet climate change targets and goals is also a risk factor.
• The company's ability to attract and retain qualified personnel is also a risk factor.

Future Outlook

International Paper anticipates creating a global leader in sustainable packaging and expects the acquisition to drive significant value for employees, customers, and shareholders. The company aims to close the deal by the end of the year.

Management Comments

• CEO Andrew K. Silvernail stated he is 'super excited' about the transaction and believes it will allow the company to grow at an accelerated rate and become the true global leader in sustainable packaging.
• Management and the International Paper Board of Directors are asking shareholders to vote 'FOR' the proposal.

Industry Context

The acquisition of DS Smith positions International Paper to better compete in the growing market for sustainable packaging, particularly in Europe, where DS Smith has a strong presence. This move aligns with the industry trend towards more environmentally friendly packaging solutions and expands IP's geographic reach and product offerings.

Comparison to Industry Standards

• The combined company aims to derive approximately 90% of its revenue from sustainable fiber-based packaging, aligning with the increasing industry focus on eco-friendly materials.
• The projected synergies of at least $514 million are substantial and indicate a significant opportunity for cost savings and operational efficiencies, comparable to other major acquisitions in the packaging industry.
• DS Smith's $9.4 billion in European sales combined with IP's $1.5 billion will create a major player in the European market, potentially rivaling established companies like Smurfit Kappa and Mondi.

Stakeholder Impact

• Shareholders are being asked to vote on a proposal that management believes will create significant shareholder value.
• Employees are expected to benefit from the creation of a global leader in sustainable packaging.
• Customers are expected to benefit from enhanced offerings, innovation, and geographic reach.
• The company expresses confidence that the combination will drive significant value for its stakeholders.

Next Steps

• International Paper shareholders will vote on the proposal to issue new shares on October 11, 2024.
• The company aims to close the acquisition of DS Smith by the end of the year.

Key Dates

Keywords

DS Smith, acquisition, shareholder vote, International Paper, sustainable packaging, synergies, EPS accretive