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
MEMPHIS,
Tenn., April 4, 2024 /PRNewswire/ --
International Paper Company ("International Paper") is
pleased to provide an update on its possible offer for DS Smith plc
("DS Smith"), pursuant to which International Paper would
acquire the entire issued and to be issued share capital of DS
Smith (the "Combination").
International Paper confirms that significant progress has been
made in reciprocal due diligence as facilitated by the DS Smith
Board and Management, and that it is now in a position to provide
shareholders with more detail on the type and quantum of synergies
it believes would arise from the Combination.
Corrugated packaging solutions is a core component of DS Smith's
business. Due diligence has confirmed International Paper's belief
that the Combination will significantly strengthen the combined
packaging business and customer offerings – with packaging
representing 84% of International Paper's current sales,
approximately $1.5 billion (£1.2
billion1) of which is driven from European sales.
Commenting on the Combination, Mark
Sutton, Chairman and CEO of International Paper, said:
"Bringing International Paper together with DS Smith is a logical
next step in International Paper's strategy to create value by
strengthening our packaging businesses in North America and Europe. By combining the strengths of both
companies, we believe we can enhance our offering of sustainable
packaging solutions for customers in attractive and growing
markets."
Also commenting, the CEO-Elect of International Paper,
Andy Silvernail, said: "Upon being
selected as the next CEO, International Paper engaged me in an
advisory role that allowed me to have discussions with Mark and the
Board regarding this strategic proposal. I am fully aligned with
their views and supportive of the opportunity," Silvernail added,
"I believe the combination of International Paper and DS Smith
would create a winning position in renewable packaging and would be
a strong catalyst to drive profitable growth and create value. I am
highly committed to delivering the expected synergies associated
with this opportunity as well as the other profit improvement
initiatives in place throughout the Combined Group."
The International Paper Board continues to consider M&A in a
disciplined manner and believes an acquisition of DS Smith is
aligned with International Paper's strategy to enhance its
corrugated packaging business in Europe and would create significant value for
both DS Smith and International Paper shareholders.
Expected Synergies
International Paper expects that the Combination will generate
significant synergies and drive compelling value creation for DS
Smith and International Paper shareholders. The delivery of the
synergies will be supported by International Paper's significant
expertise in acquiring and integrating businesses. In addition,
International Paper's confidence in delivering a successful
integration is underpinned by DS Smith's own expertise in acquiring
businesses and integrating them.
International Paper's Directors, along with its outside adviser,
Merrill Lynch International ("BofA Securities"), have
reviewed and analysed the potential synergies of the Combination.
The potential synergies have subsequently been independently
validated and sensitised as part of a Quantified Financial Benefits
Statement under Rule 28.1(a) of the Code. Taking into account the
factors they can influence, the Directors believe that the combined
International Paper and DS Smith group (the "Combined
Group") can deliver at least $514
million (£407 million[1]) of pre-tax cash synergies on an
annual run-rate basis by the end of the fourth year following
completion of the Combination ("Completion"). These
synergies are expected to be derived from the following key
areas:
- 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 the Combined Group.
- 5%, or $26 million (£21
million1) from capex procurement synergies, by
leveraging increased scale of the Combined 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.
International Paper anticipates that the total costs to achieve
the synergies outlined above would be approximately $370 million (£293 million1).
International Paper expects that approximately 33% of the synergies
outlined above would be achieved by the end of the first year
following Completion, with approximately 66% and 95% achieved by
the end of the second and third years following Completion, all on
a run-rate basis, respectively.
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 International Paper's
reporting accountant, Deloitte LLP ("Deloitte"), and its
financial adviser, BofA Securities, in connection with the
anticipated Quantified Financial Benefits Statement, as required
pursuant to Rule 28.1(a) of the Code, and provides underlying
information and bases for the reporting accountant's and adviser's
respective reports. BofA Securities as financial adviser to
International Paper, has provided its report for the purposes of
the Code stating that, in its opinion and subject to the terms of
the reports, the Quantified Financial Benefits Statement, for which
the International Paper Directors are responsible, has been
prepared with due care and consideration. Each of Deloitte and BofA
Securities has given and not withdrawn its consent to the
publication of its respective report in this announcement in the
form and context in which it is included.
The International Paper Board believes these synergies will
contribute to significant value creation for both DS Smith and
International Paper shareholders. The Combination is expected to
increase International Paper's margins through synergies and to be
immediately earnings per share (EPS) accretive. Return on invested
capital (ROIC) from the Combination is expected to exceed
International Paper's weighted average cost of capital (WACC) by
the end of the third year following Completion.
Plans for DS Smith's Operations & Headquarters
As part of the Combination, International Paper envisages that
DS Smith's North American manufacturing locations and International
Paper's European manufacturing locations would continue their
respective operations. Though it is intended that the Combined
Group would be headquartered and domiciled in Memphis, Tennessee, USA, at International
Paper's existing headquarters, International Paper intends to
maintain key elements of DS Smith's headquarters functions and is
proposing to establish a European headquarters in London, United Kingdom, at DS Smith's existing
headquarters (subject to any required information and consultation
with any impacted employees and/or their representatives in
accordance with applicable law).
Plans for Secondary Listing
As part of the Combination, any new International Paper shares
issued to DS Smith shareholders will be authorised for primary
listing on the New York Stock Exchange subject to official notice
of issuance and International Paper intends to seek a secondary
listing of its shares on the London Stock Exchange.
In accordance with Rule 2.6(a) of the U.K. Takeover Code,
International Paper is required, by not later than 5.00 p.m. (London time) on 23 April 2024, to either
announce a firm intention to make an offer for DS Smith in
accordance with Rule 2.7 of the Code or announce that it does not
intend to make an offer, in which case the announcement will be
treated as a statement to which Rule 2.8 of the Code applies. This
deadline can be extended with the consent of the Takeover Panel in
accordance with Rule 2.6(c) of the Code.
In accordance with Rule 2.5(a) of the U.K. Takeover Code,
International Paper reserves the right to make an offer for DS
Smith on less favourable terms than those set out in this
announcement: (i) with the agreement or recommendation of the DS
Smith Board; or (ii) if a third party announces (after the date of
this announcement) a firm intention to make an offer or a possible
offer for DS Smith which, at that date, is of a value less than the
value implied by the Exchange Ratio. International Paper reserves
the right to introduce other forms of consideration and/or vary the
mix or composition of consideration of any offer.
This announcement has been made by International Paper without
the prior agreement or approval of DS Smith.
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
International Paper dated 26 March
2024 of a possible offer by it for DS Smith.
Enquiries:
International Paper
Company
|
+1 901 419
1731
|
Mark Nellessen
|
|
|
|
FGS
Global
|
IP@fgsglobal.com
|
Robin Weinberg/Danya
Al-Qattan
|
+1 212 687
8080
|
James Murgatroyd/Gordon
Simpson/Edward Treadwell
|
+44 20 7251
3801
|
|
|
BofA Securities (Sole
Financial Adviser to International Paper)
|
+44 20 7628
1000
|
Luca
Ferrari
|
|
Geoff Iles
|
|
Antonia
Rowan
|
|
Tom Brown
|
|
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
3.30 p.m. (London time) on the 10th business day
following the commencement of the offer period and, if appropriate,
by no later than 3.30 p.m.
(London time) on the 10th business
day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the
relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening
Position Disclosure must instead make a Dealing Disclosure.
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 3.30
p.m. (London time) on the
business day following the date of the relevant dealing.
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 Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position disclosure or a dealing
disclosure.
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 (London time)
on the next business day following the date of this
announcement.
The content of the website referred to in this announcement
is not incorporated into and does not form part of this
announcement.
Other
Skadden, Arps, Slate, Meagher & Flom LLP is acting as
legal adviser to International Paper.
Merrill Lynch International ("BofA Securities"), which
is authorised by the Prudential Regulation Authority ("PRA")
and regulated by the Financial Conduct Authority and the PRA in the
United Kingdom, is acting
exclusively for International Paper and for no one else and will
not be responsible to anyone other than International Paper for
providing the protections afforded to its clients or for providing
advice in relation to the matters referred to in this announcement.
Neither BofA Securities, nor any of its affiliates, owes or accepts
any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise)
to any person who is not a client of BofA Securities in connection
with this announcement, any statement contained herein or
otherwise.
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
the United States. No offer of
securities shall be made in the United
States absent registration under the Securities Act of 1933,
as amended, or pursuant to an exemption from, or in a transaction
not subject to, such registration requirements.
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 England.
The distribution of this announcement in jurisdictions other
than the United Kingdom may be
affected by the laws of relevant jurisdictions. Therefore, any
persons who are subject to the laws of any jurisdiction other than
the United Kingdom or shareholders
of International Paper or DS Smith who are not resident in
the United Kingdom will need to
inform themselves about, and observe, any applicable requirements.
Any failure to comply with the restrictions may constitute a
violation of the securities law of any such jurisdiction.
Forward Looking Statements
This announcement contains certain forward-looking statements
with respect to the financial condition, results of operations and
business of International Paper, DS Smith and certain plans and
objectives of International Paper, DS Smith and the Combined
Group.
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 International Paper in light of its experience
and their perception of historical trends, current conditions,
future developments and other factors it believes appropriate, and
therefore are subject to risks and uncertainties which could cause
actual results to differ materially from those expressed or implied
by those forward-looking statements.
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 International Paper
or DS Smith; and (iii) the effects of government regulation on the
business of International Paper or DS Smith. There are many factors
which could cause actual results to differ materially from those
expressed or implied in forward looking statements. Among such
factors are changes in the global, political, economic, business,
competitive, market and regulatory forces, future exchange and
interest rates, changes in tax rates and future business
combinations or disposals.
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 International Paper or
any persons acting on its behalf are expressly qualified in their
entirety by the cautionary statement above. International Paper
does not undertake any obligation to update publicly or revise
forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent legally
required.
The Annual Report on Form 10-K of International Paper for the
year ended 31 December 2023 contains
additional information regarding forward-looking statements and
risk factors with respect to International Paper.
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 Combined Group's earnings
per share in the first full year following Completion, or in any
subsequent period, would necessarily match or be greater than or be
less than those of International Paper or DS Smith for the relevant
preceding financial period or any other period. For the purposes of
Rule 28 of the Code, the Quantified Financial Benefits Statement
contained in this announcement is the responsibility of
International Paper and the International Paper Directors.
APPENDIX
PART A
Quantified Financial Benefits
Statement
International Paper has made the following quantified financial
benefits statement in paragraph 7 of the announcement (the
"Quantified Financial Benefits Statement"):
"International Paper expects that the Combination will
generate significant synergies and drive compelling value creation
for DS Smith and International Paper shareholders. The delivery of
the synergies will be supported by International Paper's
significant expertise in acquiring and integrating businesses. In
addition, International Paper's confidence in delivering a
successful integration is underpinned by DS Smith's own expertise
in acquiring businesses and integrating them.
International Paper's Directors, along with its outside
adviser, Merrill Lynch International ("BofA Securities"),
have reviewed and analysed the potential synergies of the
Combination. The potential synergies have subsequently been
independently validated and sensitised as part of a Quantified
Financial Benefits Statement under Rule 28.1(a) of the Code. Taking
into account the factors they can influence, the Directors believe
that the combined International Paper and DS Smith group (the
"Combined Group") can deliver at least $514 million (£407 million1) of
pre-tax cash synergies on an annual run-rate basis by the end of
the fourth year following completion of the Combination
("Completion"). These synergies are expected to be derived
from the following key areas:
- 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 the Combined
Group.
- 5%, or $26 million (£21
million1) from capex procurement synergies, by
leveraging increased scale of the Combined 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.
International Paper anticipates that the total costs to
achieve the synergies outlined above would be approximately
$370 million (£293
million1). International Paper expects that
approximately 33% of the synergies outlined above would be achieved
by the end of the first year following Completion, with
approximately 66% and 95% achieved by the end of the second and
third years following Completion, all on a run-rate basis,
respectively.
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 Combined Group
should be able to achieve the synergies set out in the Quantified
Financial Benefits Statement.
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"), Deloitte, LLP ("Deloitte"), as
reporting accountants to International Paper, has provided a report
stating that, in their opinion, the Quantified Financial Benefits
Statement has been properly compiled on the basis stated. In
addition, BofA Securities, as financial adviser to International
Paper, has provided its report stating that, in its view, the
Quantified Financial Benefits Statement has been prepared with due
care and consideration.
Copies of these reports are included in this Appendix. Each of
Deloitte and BofA Securities has given and not withdrawn its
consent to the publication of its report in this announcement in
the form and context in which it is included.
Bases of calculation of the Quantified Financial Benefits
Statement
In preparing the Quantified Financial Benefits Statement,
International Paper has relied on a combination of publicly
available information and information obtained through reciprocal
due diligence. In such circumstances, International Paper
management has made estimates and assumptions to aid its
development of individual synergy initiatives. The assessment and
quantification of the potential synergies have, in turn, been
informed by the International Paper management's industry
experience and knowledge of the existing businesses, without
consultation with DS Smith on the detailed quantification of the
synergies.
The cost bases used as the basis for the Quantified Financial
Benefits Statement are a blend of International Paper's FY23
financial results and DS Smith's FY23 financial results. The total
addressable cost base used as the basis for the quantified exercise
is $24.9 billion (£19.8
billion1).
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 International Paper management's industry
experience as well as their experience of executing and integrating
past acquisitions.
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 International Paper and DS Smith, no synergies relating to
operations have been included where no overlap exists.
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 International Paper:
- 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 or United 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 International Paper that there
will be no material divestments made by International Paper save as
previously announced by International Paper as at the date of this
announcement.
In addition, the International Paper Directors have assumed that
the cost synergies are substantively within International Paper's
control, albeit that certain elements are dependent in part on
negotiations with third parties.
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 of International 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 the Combined
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 International Paper Company
6400 Poplar Ave
Memphis, TN
38197
United States of America
The Directors
Merrill Lynch International
2 King Edward Street
London
EC1A 1HQ
4th April 2024
Dear Sirs/Mesdames,
Possible offer for DS Smith plc ("The Target") by
International Paper Company ("The Offerer")
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 4 April 2024 (the "Announcement") issued by The
Offerer (the "Quantified Financial Benefits Statement").
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 Financial Reporting Council in
the United Kingdom ("FRC").
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 Directors and Merrill Lynch
International. Our work did not involve any independent examination
of any of the financial or other information underlying the
Statement.
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 United Kingdom,
including the United States of
America, and accordingly should not be relied upon as if it
had been carried out in accordance with those standards and
practices. We have not consented to the inclusion of this report
and our opinion in any registration statement filed with the SEC
under the U.S. Securities Act of 1933 (either directly or by
incorporation by reference) or in any offering document enabling an
offering of securities in the United
States (whether under Rule 144A or otherwise). We therefore
accept no responsibility to, and deny any liability to, any person
using this report and opinion in connection with any offering of
securities inside the United States of
America or who makes a claim on the basis they had acted in
reliance on the protections afforded by United States of America law and
regulation.
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
Deloitte LLP
Deloitte LLP is a limited liability partnership registered in
England and Wales with registered number OC303675 and its
registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom. Deloitte LLP is the
United Kingdom affiliate of
Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu
Limited, a UK private company limited by guarantee ("DTTL"). DTTL
and each of its member firms are legally separate and independent
entities. DTTL and Deloitte NSE LLP do not provide services to
clients.
APPENDIX
PART C
Report from BofA Securities on the Quantified
Financial Benefits Statement
The Board of Directors
on behalf of International Paper Company
6400 Poplar Ave
Memphis, TN
38197
United States of America
4 April 2024
Dear Sirs,
Possible offer for DS Smith plc ("DS Smith") by International
Paper Company ("International Paper")
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 International Paper dated 4 April
2024 (the "Announcement"), for which the Board of
International Paper (the "Directors") are solely responsible
under Rule 28 of the City Code on Takeovers and Mergers (the
"Code").
We have discussed the Statement (including the assumptions and
sources of information referred to therein), with the Directors and
those officers and employees of International Paper who developed
the underlying plans, as well as with Deloitte LLP
("Deloitte"). The Statement is subject to uncertainty as
described in this Announcement and our work did not involve an
independent examination of any of the financial or other
information underlying the Statement.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by, or on behalf of,
International Paper, or otherwise discussed with or reviewed by us,
and we have assumed such accuracy and completeness for the purposes
of providing this letter.
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 International Paper or its shareholders or any
person other than the Directors in respect of the contents of this
letter. We are acting as financial adviser to International Paper
and no one else in connection with the proposed transaction and it
was for the purpose of complying with Rule 28.1(a)(ii) of the Code
that International Paper requested us to prepare this report on the
Statement. No person other than the Directors can rely on the
contents of this letter, and to the fullest extent permitted by
law, we exclude all liability (whether in contract, tort or
otherwise) to any other person, in respect of this letter, its
results, or the work undertaken in connection with this letter, or
any of the results that can be derived from this letter or any
written or oral information provided in connection with this
letter, and any such liability is expressly disclaimed except to
the extent that such liability cannot be excluded by law.
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,
Merrill Lynch International ("BofA Securities")
1 GBP:USD of 1:1.2619 as at
3 April 2024.
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SOURCE International Paper