March 26 (Reuters) - Paper and packaging company DS

Smith ( DITHF ) said on Tuesday that it is in discussions with

U.S.-listed International Paper ( IP ) regarding a proposal to

buy the British packaging firm through a possible all-share

offer.

Under the terms of the proposal, DS Smith ( DITHF ) shareholders

would receive 0.1285 shares in International Paper ( IP ) for each

share they own in DS Smith ( DITHF ), resulting in DS Smith ( DITHF ) shareholders

owning about 33.8%. of the combined International Paper-DS Smith

group.

Earlier this month, 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) to create a paper and

packaging giant worth more than 10 billion pounds in market

value.

($1 = 0.7918 pounds)