Skadden, Slaughter and May lead on International Paper’s £5.8bn DS Smith acquisition

Deal sees Skadden-repped International Paper beat earlier offer from British rival Mondi

Skadden is advising longtime client International Paper on its £5.8bn recommended offer for FTSE 100 UK packaging firm DS Smith, which is being repped by Slaughter and May.  

The all-share deal sees Tennessee-based International Paper, one of the biggest paper and pulp companies in the world, beat out the £5.14bn offer put forward by Linklaters-repped UK rival Mondi in March.

News of the merger comes amid a surge in global M&A after dealmaking slumped to a 10-year low in 2023, as an improved interest rate outlook, slowing inflation and strong corporate earnings see confidence return to boardrooms. Global M&A volumes jumped 38% in the first quarter compared to the same period in 2023 to nearly $800bn, according to LSEG, though deals are taking longer to complete amid increased regulatory scrutiny.

Skadden led the global M&A legal advisor rankings by deal value in the opening three months of the year, working on 45 deals worth $150bn. The firm finished the same period in 2023 in second spot, eventually dropping to sixth in the rankings for the year.  

Meantime Slaughters ranked in 24th place, working on 23 deals in the first quarter worth $26.6bn. The firm did not feature in the top 25 for the overall 2023 rankings.

The Skadden team acting for International Paper is led by London corporate partner Ani Kusheva and includes corporate partners Bruce Embley and Lorenzo Corte and antitrust partner Giorgio Motta alongside a supporting cast of counsel and associates.  

Kusheva has advised International Paper on a number of deals across Europe, including the acquisition of two packaging businesses in northwestern France and Portugal from DS Smith in 2019. She also acted for the company in its $10.7bn bid for Dublin-based packaging giant Smurfit Kappa, which was shelved in 2018.  

Meantime the Slaughters’ team that advised DS Smith in the earlier Mondi offer is acting for the company on the International Paper acquisition. It is being led by corporate partner duo David Watkins and Paul Dickson, alongside partners Anna Lyle-Smythe (competition); Phil Linnard (employment and incentives); Azadeh Nassiri (financing); Daniel Schaffer (pensions); and Mike Lane (tax). 

Back in 2018 Lyle-Smythe and Lane also helped lead a Slaughters team that repped DS Smith when it bought Western European packaging business Europac in a £1.45bn deal.  

Having seen a sales boom during the Covid-19 pandemic, Reuters reported paper packaging firms have been hit by low volumes and prices in the past 12 months as customers de-stocked amid tough market conditions.  

International Paper’s merger with DS Smith is the second multi-billion dollar bid for consolidation in the industry in recent months, following Dublin-based Smurfit Kappa’s announcement last September that it was buying US firm WestRock in an $11bn deal expected to close later this year. Irish law firm Matheson is advising Smurfit on the matter alongside Wachtell Lipton Rosen & Katz and Freshfields Bruckhaus Deringer, while Westrock is being guided by Paul Weiss and Cravath Swaine & Moore.

DS Smith said its merger with International Paper would create “a global leader in sustainable packaging solutions, focused on the growing North American and European regions”.  

The companies expect cost savings of at least £413m a year by the end of the fourth year after the takeover, fuelled by greater scale and optimisation of the mill network, supply chains and freight costs.

Upon completion of the deal, DS Smith shareholders will own around 33.7% of the combined company and International Paper shareholders will own the rest.  

As part of the deal International Paper said it would also seek a secondary listing of its shares on the London Stock Exchange and intended to retain DS Smith’s London headquarters as its new EMEA headquarters.

Goldman Sachs, Citi and JP Morgan acted as financial advisers to DS Smith, while BofA Securities acted as sole financial adviser to International Paper.

The deal is expected to close in the fourth quarter of this year. 

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