April 16 (Reuters) - International Paper ( IP ) said on

Tuesday it had agreed to an all-share deal to buy DS Smith ( DITHF )

, valuing the British paper and packaging firm at 5.8

billion pounds ($7.20 billion).

Upon completion of the combination, DS Smith ( DITHF ) shareholders

will own about 33.7% and International Paper ( IP ) shareholders will

own the rest of the combined company, which plans to seek a

secondary listing in London.

DS Smith ( DITHF ) said it would recommend shareholder to back the

deal with International Paper ( IP ), adding that it had recently

received proposals from both International Paper ( IP ) and Mondi ( MNODF )

, but the U.S. company was now in a position to make a

firm offer.

The two suitors have an April 23 deadline to make a firm

offer or walk away.

($1 = 0.8050 pounds)