Shares in UK paper and packaging firm DS Smith spiked on Thursday on reports rival group Mondi is considering a bid in what would be one of the largest British deals this year.
FTSE 100-listed Mondi has been speaking with advisers, Bloomberg reported citing unnamed sources. An acquisition of fellow blue-chip D S Smith, worth more than £5bn, would add another 30,000 to Mondi’s 26,000- strong global workforce.
Shares in Smith were up 14% in early trade, and were 8% higher at 0942 GMT.
Consumers have turned to online shopping amid the pandemic, boosting demand for packaging companies as retailers grapple with increased deliveries.
D S Smith’s shares have risen over 10pc in the past year – since before the pandemic – including 2.5% through 2021 so far, giving it a market value of £5.3bn.
According to data compiled by Bloomberg, a deal between the two rivals would be one of the largest in the UK this year. Deliberations are, however, at an early stage, without certainty they will lead to a buyout. Both firms declined to comment.
Mondi on Thursday said annual profits fell by a third on the back of “significantly lower” average selling prices for pulp and paper grades and the Covid-19 pandemic.
The company on Thursday said pre-tax profits for the year to December 31 fell 30% to 77m. Underlying core earnings declined 18% to 1.35bn, while revenue was down to 6.6bn from 7.2bn.
Mondi declared a total dividend of 60 euro cents a share, up 5% year on year.
