March 7 (Reuters) - Mondi ( MNODF ) reached an agreement

in principle for an all-share offer to buy smaller rival DS

Smith ( DITHF ) for 5.14 billion pounds($6.57 billion) on

Thursday to create a paper and packaging giant worth more than

10 billion pounds in market value.

The terms of the deal represent an implied value of 373

pence per DS Smith ( DITHF ) share, a 33% premium to DS Smith's ( DITHF ) closing

share price of 281p on Feb.7, a day before Mondi ( MNODF ) announced the

prelim bid.

"The combination is an exciting opportunity to create a

pan-European industry leader in paper-based sustainable

packaging solutions," the companies said in a joint statement.

Mondi's ( MNODF ) offer marks the second recent multi-billion attempt

at consolidation in the paper and packaging industry.

Rival Smurfit Kappa is buying WestRock ( WRK ) in a

$11 billion deal that has yet to close.

($1 = 0.7822 pounds)