(Reuters) - Shares in DS Smith ( DITHF ) rose more than 7% on Friday, a day after bigger rival Mondi ( MNODF ) made a 5.14 billion pound ($6.58 billion) all-share offer to buy the British paper and packaging group.

The deal, which will create a packaging giant worth more than 11 billion pounds, valued DS Smith ( DITHF ) at about 373 pence per share, a 33% premium to its closing price before Mondi ( MNODF ) made its interest public last month.

"Anticipating limited regulatory hurdles or third-party interloper risks, we believe the proposed merger benefits both Mondi ( MNODF ) and DS Smith ( DITHF ) shareholders," Davy Research analyst Justin Jordan wrote in a note.

Shares in DS Smith ( DITHF ), whose customers include e-commerce giant Amazon among others, have rallied since Mondi's ( MNODF ) approach first came to light in early February. The stock hit a more than one-year high of 350 pence in early trade.

Mondi ( MNODF ) shares, however, fell 2.5%.

While the key financial terms have been agreed upon in principle, the combination is still conditional on other terms and conditions.

($1 = 0.7812 pounds)