International Paper gets EU nod for DS Smith acquisition
International Paper, in an update, said that while the European Commission issued its Phase I clearance of the deal on 24 January 2025, the clearance was conditional on International Paper entering into commitments to divest its box plants located in Mortagne, Saint-Amand, and Cabourg in France, Ovar in Portugal, and Bilbao in Spain.
29 Jan 2025 | By Prabhat Prakash
The European Commission has granted International Paper phase I clearance to combine with DS Smith, but this was conditional on International Paper entering into commitments to divest five of its European box plants.
The boards of International Paper and DS Smith said they had initially reached an agreement on the terms of the recommended all-share combination deal in April. The deal was implemented through a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006. The agreement is subject to the terms and conditions in the scheme document published on 11 September 2024.
DS Smith published the scheme document and sent it to its shareholders on 11 September 2024, the scheme was approved by the requisite majority of DS Smith shareholders on 7 October 2024.
In a separate statement, the European Commission said its investigation showed that the transaction, as initially notified, "would have reduced competition" in the markets for the manufacture and supply of corrugated sheets in the North and West of Portugal, heavy-duty corrugated sheets in North-East Spain, and corrugated cases in North-West France.
The transaction would have resulted in high combined shares, as well as high concentration levels, in several local markets, the Commission found. Further findings of the Commission revealed that, after the merger, there would not be enough alternative competitors to exert sufficient competitive pressure on the merged entity. This would have led to higher prices for consumers in the affected markets.
The parties offered to divest the five aforementioned International Paper box plants to address the Commission's competition concerns, and the Commission said these commitments fully addressed the competition concerns it had identified. Divestment completion is not a condition to the completion of the deal.
The acquisition remains subject to the Court sanctioning the scheme at the court hearing, the delivery of the court order to the Registrar of Companies, and the satisfaction or – if capable of waiver – the waiver of the remaining conditions to the scheme.
The court hearing is scheduled for 30 January 2025, and the scheme is expected to become effective the following day. International Paper said these dates and times are indicative only and are subject to change.