10:52 AM EDT, 04/04/2024 (MT Newswires) -- International Paper ( IP ) said Thursday that a due diligence process showed that a possible offer for UK-based DS Smith would "significantly strengthen the combined packaging business."

Packaging represents 84% of its sales, about $1.5 billion of which comes from European sales, International Paper ( IP ) said.

A combined company could deliver at least $514 million of pre-tax cash synergies on an annual run-rate basis by the end of the fourth year after completion of the deal, the company said.

DS Smith said on March 26 that it was in talks with International Paper ( IP ) regarding an all-stock takeover proposal valued at 5.72 billion British pounds ($7.22 billion). DS Smith had previously agreed to merge with competitor Mondi in a deal valued at 5.1 billion pounds.

International Paper ( IP ) confirmed the talks, saying under the proposed deal DS Smith shareholders would get 0.1285 shares in International Paper ( IP ) for each share owned, resulting in DS Smith shareholders holding about 34% of the combined company.

Under UK takeover rules, International Paper ( IP ) has until April 23 to make a firm offer.

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