06:34 AM EDT, 04/16/2024 (MT Newswires) -- International Paper ( IP ) agreed to acquire UK-based packaging peer DS Smith in an all-stock deal with an implied value of about $9.9 billion, to establish a combined global packaging solutions provider.

Under the terms, International Paper ( IP ) will issue 0.1285 of its shares for each share of DS Smith, valuing the firm's stock at 415 pence ($5.16) apiece based on March 25 prices, the companies said in a joint statement Tuesday. The proposed deal will see International Paper ( IP ) shareholders own 66.3% of the combined firm, with DS Smith investors holding the remaining 33.7% stake.

The deal, which requires approval from regulators in the US and Europe, as well as from both companies' stockholders, is anticipated to close by the fourth quarter. International Paper ( IP ) will also seek a secondary listing of its shares on the London stock exchange once the transaction completes.

"Bringing together the capabilities and expertise of both companies will create a winning position in renewable packaging across Europe, while also enhancing IP's North American business," incoming International Paper ( IP ) Chief Executive Andrew Silvernail said in the statement. "I firmly believe this strategic combination offers a unique and highly compelling opportunity to create tremendous shareholder value."

The companies estimate the deal to be accretive to earnings on a per-share basis in the first year after completion, and to generate at least $514 million in annual pretax cash synergies by the end of the fourth year. International Paper ( IP ) expects total costs of about $370 million to attain the synergies.

"The combination with IP is an attractive opportunity to create a truly international sustainable packaging solutions leader that is well positioned in attractive and growing markets across Europe and North America," said DS Smith CEO Miles Roberts. "The combination will enhance our global proposition to customers, create opportunities for colleagues and drive value for shareholders."

Silvernail, who is set to take over the top role at International Paper ( IP ) in the beginning of May, will be CEO of the combined company, while Roberts will remain as a consultant to help out with the integration. The firm will be headquartered in Memphis, Tennessee.

The agreement comes after both firms were reported in late March to be in talks over a potential deal. DS Smith previously agreed in-principal to terms for a 5.14 billion pound takeover by competitor Mondi.