Recommended All-Share Combination
27/08/2024 07:00
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RNS Number : 6951B International Paper Company 27 August 2024
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
27 August 2024
RECOMMENDED ALL-SHARE COMBINATION
OF
DS SMITH PLC
WITH
INTERNATIONAL PAPER COMPANY
FILING OF PRELIMINARY PROXY STATEMENT WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
On 16 April 2024, the boards of International Paper Company ("International
Paper") and DS Smith Plc ("DS Smith") announced they had reached agreement on
the terms of a recommended all-share combination of International Paper with
DS Smith (the "Combination").
On 23 August 2024, International Paper filed a preliminary proxy statement on
Schedule 14A with the United States Securities and Exchange Commission (the
"Preliminary Proxy Statement"). A copy of the Preliminary Proxy Statement is
available at
https://www.internationalpaper.com/investors/financial-reports/sec-filings.
IP FY24 Profit Forecast
The Preliminary Proxy Statement contains the following statement, which for
the purposes of Rule 28.1(a) of the City Code on Takeovers and Mergers (the
"Code") constitutes a profit forecast published by International Paper during
an offer period (the "IP FY24 Profit Forecast"):
Fiscal year ending 31 December
($ amounts in millions) 2024E
Adjusted EBITDA $1,933
The Appendix to this announcement includes reports from International Paper's
reporting accountant, Deloitte LLP ("Deloitte"), and its financial adviser,
BofA Securities, in connection with the IP FY24 Profit Forecast, as required
pursuant to Rule 28.1(a) of the Code, and provides underlying information and
bases for the reporting accountant's and adviser's respective reports.
Deloitte as accountant to International Paper, has provided its report for the
purposes of Rule 28.1(a) of the Code stating that, in its opinion and subject
to the terms of the report, the IP FY24 Profit Forecast, for which the
International Paper Directors are responsible, has been properly compiled on
the basis stated and that the basis of accounting used is consistent with
International Paper's accounting policies. BofA Securities as financial
adviser to International Paper, has provided its report for the purposes of
the Code stating that, in its opinion and subject to the terms of the reports,
the IP FY24 Profit Forecast, for which the International Paper Directors are
responsible, has been prepared with due care and consideration. Each of
Deloitte and BofA Securities has given and not withdrawn its consent to the
publication of its respective report in this announcement in the form and
context in which it is included.
IP FY25 and FY26 Profit Forecasts
The Preliminary Proxy Statement also contains the following statement, which
for the purposes of Rule 28.1(a) of the Code constitutes profit forecasts
published by International Paper during an offer period (the "IP FY25/26
Profit Forecasts"):
Fiscal year ending 31 December
($ amounts in millions) 2025E 2026E
Adjusted EBITDA $2,432 $2,635
Confirmations
Pursuant to Note 2(b) to Rule 28.1 of the Code, the Panel granted
International Paper a dispensation from the requirement to include reports
from reporting accountants and International Paper's financial advisers in
relation to the IP FY25/26 Profit Forecasts because they are for financial
periods ending more than 15 months from the date on which they are each first
published.
In accordance with Rule 28.1(c)(i) of the Code, the International Paper
Directors confirm that the IP FY25/26 Profit Forecasts remain valid each as a
projected profit floor for the relevant financial period as at the date of
this announcement, and each has been properly compiled on the basis of the
assumptions stated below and that the basis of accounting used is consistent
with International Paper's accounting policies.
Basis of preparation
The IP FY25/26 Profit Forecasts have been properly compiled on the basis of
the assumptions stated below. The accounting policies applied in preparing the
IP FY25/26 Profit Forecasts are consistent with those applied in the
preparation of the International Paper Group's annual results for the fiscal
year ended 31 December 2023, which are in accordance with U.S. GAAP.
The IP FY25/26 projected profit floor is based upon (i) the trading
performance reflected in the published consolidated unaudited first and second
quarter 2024 financial results for the six months ended 30 June 2024; (ii) its
unaudited management accounts for the month of July 2024; (iii) its internal
forecasts for the remaining five months of the year ending 31 December 2024;
(iv) its projected performance from International Paper's long-term strategic
plan for the financial years ending 31 December 2025 and 2026 presented to
the International Paper Board; and (v) the key assumptions outlined below.
Assumptions
The IP FY25/26 Profit Forecasts are based on the following assumptions:
Factors outside the influence or control of the International Paper Directors
(a) no changes to existing prevailing macroeconomic, regulatory or
political conditions in the markets and regions in which International Paper
operates that would materially affect International Paper;
(b) the inflation and tax rates in the markets and regions in which
International Paper operates remaining materially unchanged from the
prevailing rates;
(c) no material adverse events that could have a significant impact on
International Paper's financial performance, including litigation, adverse
weather events or natural catastrophes that affect key products, supply chain
or markets or the construction process;
(d) no material changes in market conditions over the forecast period
to 31 December 2026, in relation to either customer demand or competitive
environment;
(e) no material impact on stakeholder relationships arising from the
Combination;
(f) no material adverse outcome from any ongoing or future disputes
with any customer, competitor, regulator or tax authority;
(g) no material change in International Paper's employee attrition
rates and labour costs, including medical and pension and other
post-retirement benefits driven by external parties or regulations;
(h) industry pricing indices will remain materially unchanged from the
prevailing pricing publications at the date of this announcement;
(i) no material changes to manufacturing capacity in the market that
would impact the supply and demand for volumes purchased from International
Paper;
(j) no material changes in legislation, taxation, regulatory
requirements, applicable standards or the position of any regulatory bodies
impacting on International Paper's operations or on its accounting policies;
and
(k) no material change to International Paper's ability to access the
global capital markets.
Factors within the influence or control of the International Paper Directors
(a) no material change to the present management of International
Paper prior to 31 December 2026 (for the avoidance of doubt, other than
changes related to the Combination);
(b) no major corporate acquisitions or disposals, developments,
partnership or joint venture agreements being entered into by International
Paper, prior to 31 December 2026 (for the avoidance of doubt, other than the
Combination);
(c) no material changes in the dividend or capital policies of
International Paper;
(d) International Paper's accounting policies being consistently
applied over the forecast period; and
(e) no material change in the operational structure and strategy of
International Paper.
Terms used but not defined in this announcement have the meaning given to them
in the Rule 2.7 announcement released by International Paper and DS Smith on
16 April 2024.
Enquiries
International Paper +1 901 419 1731
Mark Nellessen
Jessica Seidner
BofA Securities (Sole financial adviser to International Paper) +44 20 7628 1000
Luca Ferrari
Geoff Iles
Antonia Rowan
Tom Brown
FGS Global (PR adviser to International Paper) +1 212 687 8080
Robin Weinberg
Kelsey Markovich
Hayley Cook
Kate Gorgi
James Murgatroyd +44 20 7251 3801
Gordon Simpson
Edward Treadwell
DS Smith Plc +44 (0) 20 7756 1800
Hugo Fisher, Group Investor Relations Director
Anjali Kotak, Investor Relations Director
Goldman Sachs International (Financial adviser to DS Smith) +44 (0) 20 7774 1000
Anthony Gutman
Nick Harper
Warren Stables
Citi (Financial adviser and corporate broker to DS Smith) +44 (0) 20 7986 4000
Andrew Seaton
Christopher Wren
J.P. Morgan Cazenove (Financial adviser and corporate broker to DS Smith) +44 (0) 20 7742 4000
Charlie Jacobs
Richard Walsh
Jonty Edwards
Brunswick Group (PR adviser to DS Smith) +44 (0) 20 7404 5959
Simon Sporborg
Dan Roberts
Disclaimers
Merrill Lynch International ("BofA Securities"), which is authorised by the
Prudential Regulation Authority ("PRA") and regulated by the Financial Conduct
Authority ("FCA") and the PRA in the United Kingdom, is acting exclusively for
International Paper and for no one else in connection with the matters
referred to in this announcement and will not be responsible to anyone other
than International Paper for providing the protections afforded to its clients
or for providing advice in relation to the matters referred to in this
announcement. Neither BofA Securities, nor any of its affiliates, owes or
accepts any duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract, in tort, under statute or otherwise) to any
person who is not a client of BofA Securities in connection with this
announcement, any statement contained herein or otherwise.
Goldman Sachs International, which is authorised by the PRA and regulated by
the FCA and the PRA in the United Kingdom, is acting exclusively for DS Smith
and no one else in connection with the matters referred to in this
announcement and will not be responsible to anyone other than DS Smith for
providing the protections afforded to clients of Goldman Sachs International,
or for providing advice in connection with the matters referred to in this
announcement.
Citigroup Global Markets Limited ("Citi"), which is authorised by the PRA and
regulated in the UK by the FCA and the PRA, is acting exclusively for DS Smith
and for no one else in connection with the matters described in this
announcement and will not be responsible to anyone other than DS Smith for
providing the protections afforded to clients of Citi nor for providing advice
in connection with the matters referred to in this announcement. Neither Citi
nor any of its affiliates, directors or employees owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
consequential, whether in contract, in tort, in delict, under statute or
otherwise) to any person who is not a client of Citi in connection with this
announcement, any statement contained herein or otherwise.
J.P. Morgan Securities plc (which conducts its UK investment banking business
as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is authorised in the
United Kingdom by the PRA and regulated in the United Kingdom by the PRA and
the FCA, is acting as financial adviser exclusively for DS Smith and no one
else in connection with the matters set out in this announcement and will not
regard any other person as its client in relation to the matters set out in
this announcement and will not be responsible to anyone other than DS Smith
for providing the protections afforded to clients of J.P. Morgan Cazenove or
its affiliates, nor for providing advice in relation to the matters set out in
this announcement or any other matter or arrangement referred to herein.
In accordance with the Code, normal United Kingdom market practice and Rule
14e-5(b) of the US Exchange Act, BofA Securities and its affiliates and J.P.
Morgan Cazenove and its affiliates will continue to act as exempt principal
trader in DS Smith securities on the London Stock Exchange. These purchases
and activities by exempt principal traders which are required to be made
public in the United Kingdom pursuant to the Code will be reported to a
Regulatory Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com. This information will also be
publicly disclosed in the US to the extent that such information is made
public in the United Kingdom.
Further information
This announcement is for information purposes only and is not intended to and
does not constitute, or form any part of, an offer, invitation or the
solicitation of an offer to purchase or subscribe, otherwise acquire,
subscribe for, sell or otherwise dispose of any securities or the solicitation
of any vote or approval in any jurisdiction pursuant to the Combination or
otherwise.
The Combination will be subject to English law and to the applicable
requirements of the Code, the Panel, the Listing Rules, the London Stock
Exchange and the FCA.
The Combination will be made solely by the Scheme Document, which will contain
the full terms and conditions of the Combination, including details of how to
vote in respect of the Scheme. Any voting decision or response in relation to
the Combination should be made solely on the basis of the Scheme Document. DS
Smith Shareholders are advised to read the formal documentation in relation to
the Combination carefully once it has been published. Each DS Smith
Shareholder is urged to consult their independent professional adviser
regarding the tax consequences of the Combination.
This announcement does not constitute a prospectus or a prospectus equivalent
document.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or from an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 (as amended).
This announcement has been prepared for the purpose of complying with English
law and the Code and the information disclosed may not be the same as that
which would have been disclosed if this announcement had been prepared in
accordance with the laws of jurisdictions outside England.
Overseas shareholders
The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom (including Restricted Jurisdictions) should inform themselves about,
and observe, any applicable legal or regulatory requirements. In particular,
the ability of persons who are not resident in the United Kingdom or who are
subject to the laws of another jurisdiction to vote their DS Smith Shares in
respect of the Scheme at the Court Meeting, or to execute and deliver Forms of
Proxy appointing another to vote at the Court Meeting on their behalf, may be
affected by the laws of the relevant jurisdictions in which they are located
or to which they are subject. Any failure to comply with applicable legal or
regulatory requirements of any jurisdiction may constitute a violation of
securities laws in that jurisdiction. To the fullest extent permitted by law,
the companies and persons involved in the Combination disclaim any
responsibility or liability for the violation of such restrictions by any
person.
Copies of this announcement and any formal documentation relating to the
Combination are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from any Restricted
Jurisdiction or any jurisdiction where to do so would constitute a violation
of the laws of such jurisdiction and persons receiving such documents
(including custodians, nominees and trustees) must not mail or otherwise
forward, distribute or send copies of this announcement or any formal
documentation relating to the Combination in or into or from any Restricted
Jurisdiction. Doing so may render invalid any related purported vote in
respect of acceptance of the Combination.
If the Combination is implemented by way of an Offer (unless otherwise
permitted by applicable law and regulation), the Offer may not be made,
directly or indirectly, in or into or by use of the mails or any other means
or instrumentality (including, without limitation, facsimile, e-mail or other
electronic transmission, telex or telephone) of interstate or foreign commerce
of, or any facility of a national, state or other securities exchange of any
Restricted Jurisdiction and the Offer will not be capable of acceptance by any
such use, means, instrumentality or facilities or from within any Restricted
Jurisdiction.
Further details in relation to DS Smith Shareholders in overseas jurisdictions
will be contained in the Scheme Document.
Additional information for US investors in DS Smith
The Combination relates to the shares of an English company and is being made
by way of a scheme of arrangement provided for under Part 26 of the Companies
Act. The Combination, implemented by way of a scheme of arrangement, is not
subject to the tender offer rules or the proxy solicitation rules under the US
Securities Exchange Act of 1934, as amended (the "US Exchange Act").
Accordingly, the Combination and the Scheme will be subject to the disclosure
requirements and practices applicable to a scheme of arrangement involving a
target company incorporated in the UK and listed on the London Stock Exchange,
which differ from the disclosure requirements of US tender offer and proxy
solicitation rules. If, in the future, International Paper exercises its right
to implement the Combination by way of an Offer and determines to extend the
Offer into the United States, the Combination will be made in compliance with
applicable US laws and regulations.
The New International Paper Shares to be issued pursuant to the Combination
have not been registered under the US Securities Act of 1933, as amended, (the
"US Securities Act"), and may not be offered or sold in the US absent
registration or an applicable exemption from the registration requirements of
the US Securities Act. The New International Paper Shares to be issued
pursuant to the Combination will be issued pursuant to the exemption from
registration provided by Section 3(a)(10) under the US Securities Act. If, in
the future, International Paper exercises its right to implement the
Combination by way of an Offer or otherwise in a manner that is not exempt
from the registration requirements of the US Securities Act, it will file a
registration statement with the SEC that will contain a prospectus with
respect to the issuance of New International Paper Shares. In this event, DS
Smith Shareholders are urged to read these documents and any other relevant
documents filed with the SEC, as well as any amendments or supplements to
those documents, because they will contain important information, and such
documents will be available free of charge at the SEC's website at www.sec.gov
or by directing a request to International Paper's contact for enquiries
identified above.
Neither the SEC nor any US state securities commission has approved or
disapproved of the New International Paper Shares to be issued in connection
with the Combination, or determined if this announcement is accurate or
complete. Any representation to the contrary is a criminal offence in the
United States.
This announcement contains, and the Scheme Document will contain certain
unaudited financial information relating to DS Smith that has been prepared in
accordance with the accounting standards applicable in the UK and thus may not
be comparable to financial information of US companies or companies whose
financial statements are prepared in accordance with US generally accepted
accounting principles. US generally accepted accounting principles differ in
certain significant respects from accounting standards applicable in the UK.
It may be difficult for US DS Smith Shareholders to enforce their rights and
any claim arising out of the US federal securities laws against DS Smith or
its directors or officers, because DS Smith is incorporated under the laws of
England and Wales, some or all of DS Smith's assets are or may be located in
non-US jurisdictions, and some or all of its officers and directors are
residents of a non-US country. US DS Smith Shareholders may not be able to sue
a non-US company or its officers or directors in a non-US court for violations
of the US securities laws. Further, it may be difficult to compel a non-US
company and its affiliates to subject themselves to a US court's judgment.
US DS Smith Shareholders also should be aware that the Combination may have
tax consequences for US federal income tax purposes and under applicable US
state and local, as well as foreign and other, tax laws, and, that such
consequences, if any, are not described herein. US DS Smith Shareholders are
urged to consult with legal, tax and financial advisers in connection with
making a decision regarding the Combination.
Forward Looking Statements
This announcement contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act 1995, as amended, that
are subject to risks and uncertainties. All statements other than statements
of historical fact or relating to present facts or current conditions included
in this announcement are forward-looking statements, including any statements
regarding guidance and statements of a general economic or industry-specific
nature. Forward-looking statements give International Paper's and DS Smith's
current expectations and projections with respect to the financial condition,
results of operations and business of International Paper, DS Smith and
certain plans and objectives of International Paper, DS Smith and the Combined
Company.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. These statements are based on
assumptions and assessments made by International Paper and DS Smith in light
of their experience and their perception of historical trends, current
conditions, future developments and other factors they believe appropriate,
and therefore are subject to risks and uncertainties which could cause actual
results to differ materially from those expressed or implied by those
forward-looking statements.
Forward-looking statements often use forward-looking or conditional words such
as "anticipate", "target", "expect", "forecast", "estimate", "intend", "plan",
"goal", "believe", "hope", "aim", "will", "continue", "may", "can", "would",
"could" or "should" or other words of similar meaning or the negative thereof.
Forward-looking statements include statements relating to the following: (i)
the ability of International Paper and DS Smith to consummate the Combination
in a timely manner or at all; (ii) the satisfaction (or waiver) of conditions
to the consummation of the Combination; (iii) adverse effects on the market
price of International Paper's or DS Smith's operating results including
because of a failure to complete the Combination; (iv) the effect of the
announcement or pendency of the Combination on International Paper's or DS
Smith's business relationships, operating results and business generally;
(v) future capital expenditures, expenses, revenues, economic performance,
synergies, financial conditions, market growth, dividend policy, losses and
future prospects; (vi) business and management strategies and the expansion
and growth of the operations of the International Paper Group or the DS Smith
Group; and (vii) the effects of government regulation on the business of the
International Paper Group or the DS Smith Group. There are many factors which
could cause actual results to differ materially from those expressed or
implied in forward looking statements. Among such factors are changes in the
global, political, economic, business, competitive, market and regulatory
forces, future exchange and interest rates, changes in tax rates and future
business combinations or disposals.
These forward-looking statements are not guarantees of future performance and
are based on numerous assumptions regarding the present and future business
strategies of such persons and the environment in which each will operate in
the future. By their nature, these forward-looking statements involve known
and unknown risks and uncertainties because they relate to events and depend
on circumstances that will occur in the future. The factors described in the
context of such forward-looking statements in this announcement may cause the
actual results, performance or achievements of any such person, or industry
results and developments, to be materially different from any results,
performance or achievements expressed or implied by such forward-looking
statements. No assurance can be given that such expectations will prove to
have been correct and persons reading this announcement are therefore
cautioned not to place undue reliance on these forward-looking statements
which speak only as at the date of this announcement. All subsequent oral or
written forward-looking statements attributable to International Paper or DS
Smith or any persons acting on their behalf are expressly qualified in their
entirety by the cautionary statement above. Neither of International Paper nor
DS Smith undertakes any obligation to update publicly or revise
forward-looking statements, whether as a result of new information, future
events or otherwise, except to the extent legally required.
International Paper's Annual Report on Form 10-K for the fiscal year ended 31
December 2023, and International Paper's quarterly reports on Form 10-Q for
the periods ended 31 March 2024 and 30 June 2024 as filed with the SEC contain
additional information regarding forward-looking statements and other risk
factors with respect to International Paper.
Additional Information
This announcement may be deemed to be solicitation material in respect of the
Combination, including the issuance of the New International Paper Shares in
respect of the Combination. In connection with the foregoing proposed issuance
of the New International Paper Shares, International Paper expects to file the
International Paper Proxy Statement. To the extent the Combination is effected
as a scheme of arrangement under English law, the issuance of the New
International Paper Shares in connection with the Combination would not be
expected to require registration under the US Securities Act, pursuant to an
exemption provided by Section 3(a)(10) under the US Securities Act. In the
event that International Paper determines to conduct the Combination pursuant
to an offer or otherwise in a manner that is not exempt from the registration
requirements of the US Securities Act, International Paper expects to file a
registration statement with the SEC containing a prospectus with respect to
the New International Paper Shares that would be issued in the Combination.
INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE INTERNATIONAL PAPER PROXY
STATEMENT, THE SCHEME DOCUMENT, AND OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC OR INCORPORATED BY REFERENCE IN THE INTERNATIONAL PAPER
PROXY STATEMENT (IF ANY) CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT INTERNATIONAL PAPER, THE COMBINATION
AND RELATED MATTERS. Investors and stockholders will be able to obtain free
copies of the International Paper Proxy Statement, the Scheme Document, the
Prospectus and other documents filed by International Paper with the SEC at
the SEC's website at http://www.sec.gov. In addition, investors and
stockholders will be able to obtain free copies of the International Paper
Proxy Statement, the Scheme Document, the Prospectus and other documents filed
by International Paper with the SEC at
https://www.internationalpaper.com/investors.
Participants in the Solicitation
International Paper and its directors, officers and employees, including Mark
S. Sutton, Chairman of the International Paper Board of Directors, Andrew K.
Silvernail (also Chief Executive Officer of the International Paper), Jamie A.
Beggs, Christopher M. Connor, Ahmet C. Dorduncu, Anders Gustafsson, Jacqueline
C. Hinman, Clinton A. Lewis, Jr., Kathryn D. Sullivan, Scott A. Tozier, and
Anton V. Vincent, all of whom are members of the International Paper Board ,
as well as Timothy S. Nicholls, Senior Vice President and Chief Financial
Officer, may be deemed participants in the solicitation of proxies from
International Paper's stockholders in respect of the Combination, including
the proposed issuance of New International Paper Shares. Information regarding
International Paper's directors and executive officers is contained in: (i)
the "Directors, Executive Officers and Corporate Governance," "Executive
Compensation" and "Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters" sections of the Annual Report on
Form 10-K for the fiscal year ended 31 December 2023 of International Paper,
which was filed with the SEC on 16 February 2024; (ii) the "Item 1 - Election
of 9 Directors," "Compensation Discussion & Analysis (CD&A)," and
"Security Ownership of Management" sections in the definitive proxy statement
on Schedule 14A for the 2024 annual meeting of stockholders of International
Paper, which was filed with the SEC on 2 April 2024; and (iii) International
Paper's Current Reports on Form 8-K filed with the SEC on 19 March 2024, 23
May 2024 and 13 August 2024. Additional information regarding the identity of
potential participants, and their direct or indirect interests, by security
holdings or otherwise, will be set forth in the International Paper Proxy
Statement relating to the Combination when it is filed with the SEC. These
documents may be obtained free of charge from the SEC's website at www.sec.gov
and International Paper's website at
https://www.internationalpaper.com/investors.
Publication on website
A copy of this announcement and the documents required to be published
pursuant to Rule 26.1 and Rule 26.2 of the Code (including the Preliminary
Proxy Statement) will be made available (subject to certain restrictions
relating to persons resident in Restricted Jurisdictions), free of charge, at
www.internationalpaper.com and at www.dssmith.com by no later than 12 noon on
the Business Day following the date of this announcement.
Neither the contents of these websites nor the content of any other website
accessible from hyperlinks on such websites is incorporated into, or forms
part of, this announcement.
Hard copy documents
DS Smith Shareholders and persons with information rights may request a hard
copy of this announcement by contacting DS Smith's registrar, Equiniti, by:
(i) submitting a request in writing to Equiniti at Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, United Kingdom; or (ii) contacting Equiniti
between 8:30 a.m. and 5:30 p.m. (UK time), Monday to Friday (excluding English
and Welsh public holidays), on +44 (0) 333 207 6530 (calls from outside the UK
will be charged at the applicable international rate and you should use the
country code when calling from outside the UK) - calls may be recorded and
monitored for training and security purposes. A person so entitled may also
request that all future documents, announcements and information in relation
to the Combination be sent to them in hard copy form.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the Offer Period and, if later, following the announcement in
which any securities exchange offeror is first identified.
An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii) any securities exchange
offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 p.m. (London time) on the 10(th)
Business Day (as defined in the Code) following the commencement of the Offer
Period and, if appropriate, by no later than 3.30 p.m. (London time) on the
10(th) Business Day (as defined in the Code) following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the offeree company
or of any securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the Business Day (as defined in the Code)
following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the Offer Period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should
contact the Panel's Market Surveillance Unit on +44(0)20 7638 0129.
APPENDIX
PART A
IP FY24 Profit Forecast
The Preliminary Proxy Statement contains the following statement, which for
the purposes of Rule 28.1(a) of the Code constitutes a profit forecast
published by International Paper during an offer period (the "IP FY24 Profit
Forecast"):
Fiscal year ending 31 December
($ amounts in millions) 2024E
Adjusted EBITDA $1,933
Further information on the principal assumptions on which the IP FY24 Profit
Forecast is based, is set out below.
Reports
As required by Rule 28.1(a) of the Code, Deloitte, as reporting accountant to
International Paper, has provided a report stating that, in its opinion, the
IP FY24 Profit Forecast has been properly compiled on the basis stated and
that the basis of accounting used is consistent with International Paper's
accounting policies. In addition, BofA Securities, as financial adviser to
International Paper, has provided such report for the purposes of the Code
stating that, in its opinion and subject to the terms of the report, the IP
FY24 Profit Forecast, for which the International Paper Directors are
responsible, has been prepared with due care and consideration.
Copies of these reports are included in this Appendix. Each of Deloitte and
BofA Securities has given and not withdrawn its consent to the publication of
its report in this announcement in the form and context in which it is
included.
Basis of Preparation
International Paper has prepared the IP FY24 Profit Forecast based on its
published consolidated, unaudited first and second quarter 2024 financial
results, its unaudited management accounts for the month of July 2024 and its
internal forecasts for the remaining five months of the year ending 31
December 2024.
Details of adjustments between Earnings from Continuing Operations Before
Income Taxes and Equity Earnings and Adjusted EBITDA are included under the
Financial Highlights section of the International Paper Group's 2023 Annual
Report. These adjustments have been applied consistently in respect of the IP
FY24 Profit Forecast.
Principal Assumptions
The IP FY24 Profit Forecast is based on the following assumptions:
Factors outside the influence or control of the International Paper Directors
(a) no changes to existing prevailing macroeconomic, regulatory or
political conditions in the markets and regions in which International Paper
operates that would materially affect International Paper;
(b) the inflation, tax and foreign exchange rates in the markets and
regions in which International Paper operates remaining materially unchanged
from the prevailing rates;
(c) no material adverse events that could have a significant impact on
International Paper's financial performance, including litigation, adverse
weather events or natural catastrophes that affect key products, supply chain
or markets or the construction process;
(d) no material changes in market conditions over the forecast period
to 31 December 2024, in relation to either customer demand or competitive
environment;
(e) no material impact on stakeholder relationships arising from the
announcement of the proposed Combination;
(f) no material adverse outcome from any ongoing or future disputes
with any customer, competitor, regulator or tax authority;
(g) no material change in International Paper's employee attrition
rates and labour costs, including medical and pension and other
post-retirement benefits driven by external parties or regulations;
(h) industry pricing indices will remain materially unchanged from the
prevailing pricing publications at the date of this announcement;
(i) no material changes to manufacturing capacity in the market that
would impact the supply and demand for volumes purchased from IP;
(j) no material changes in legislation, taxation, regulatory
requirements, applicable standards or the position of any regulatory bodies
impacting on International Paper's operations or on its accounting policies;
and
(k) no material change to International Paper's ability to access the
global capital markets.
Factors within the influence or control of the International Paper Directors
(a) no material change to the present management of International
Paper prior to 31 December 2024 (for the avoidance of doubt, other than
changes related to the Combination);
(b) no major corporate acquisitions or disposals, developments,
partnership or joint venture agreements being entered into by International
Paper, prior to 31 December 2024 (for the avoidance of doubt, other than the
Combination);
(c) no material changes in the dividend or capital policies of
International Paper;
(d) International Paper's accounting policies being consistently
applied over the forecast period; and
(e) no material change in the operational structure and strategy of
International Paper.
PART B
Accountant's Report on IP FY24 Profit Forecast
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The Board of Directors
on behalf of International Paper Company
6400 Poplar Ave
Memphis, TN
38197
United States of America
The Directors
Merrill Lynch International
2 King Edward Street
London
EC1A 1HQ
27 August 2024
Dear Sirs/Mesdames,
PROFIT FORECAST BY INTERNATIONAL PAPER COMPANY ("International Paper")
We report on International Paper's forecast of consolidated adjusted earnings
before interest, taxation, depreciation and amortisation ("AEBITDA") for the
period ending 31 December 2024 (the "IP FY24 Profit Forecast"). The IP FY24
Profit Forecast, and the material assumptions upon which it is based, are set
out in Part A of the appendix to this announcement issued by the Company dated
27 August 2024 (the "Announcement").
Opinion
In our opinion, the IP FY24 Profit Forecast has been properly compiled on the
basis stated and the basis of accounting used is consistent with International
Paper's accounting policies.
Responsibilities
It is the responsibility of the directors of International Paper (the
"Directors") to prepare the IP FY24 Profit Forecast in accordance with Rule 28
of the City Code on Takeovers and Mergers (the "Takeover Code").
It is our responsibility to form an opinion, as required by Rule 28.1(a) of
the Takeover Code, as to the proper compilation of the IP FY24 Profit Forecast
and to report that opinion to you.
This report is given solely for the purposes of complying with Rule 28.1(a)(i)
of the Takeover Code and for no other purpose. Therefore, to the fullest
extent permitted by law we do not assume any other responsibility to any
person for any loss suffered by any such person as a result of, arising out
of, or in connection with this report or our statement, required by and given
solely for the purposes of complying with Rule 23.2 of the Takeover Code,
consenting to its inclusion in the Announcement.
Basis of Preparation of the IP FY24 Profit Forecast
The IP FY24 Profit Forecast has been prepared on the basis stated in Part A of
the Appendix to the Announcement and is based on (i) International Paper's
published consolidated unaudited first and second quarter 2024 financial
results; (ii) its unaudited management accounts for the month of July 2024 and
(iii) its internal forecasts for the remaining five months of the year ending
31 December 2024. The IP FY24 Profit Forecast is required to be presented on
a basis consistent with the accounting policies of International Paper.
Basis of opinion
We conducted our work in accordance with the Standards for Investment
Reporting issued by the Financial Reporting Council of the United Kingdom
("FRC"). We are independent of International Paper in accordance with the
FRC's Ethical Standard as applied to Investment Circular Reporting
Engagements, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our work included evaluating the basis on which the historical financial
information included in the IP FY24 Profit Forecast has been prepared and
considering whether the IP FY24 Profit Forecast has been accurately computed
based upon the disclosed assumptions and the accounting policies of
International Paper. Whilst the assumptions upon which the IP FY24 Profit
Forecast are based are solely the responsibility of the Directors, we
considered whether anything came to our attention to indicate that any of the
assumptions adopted by the Directors which, in our opinion, are necessary for
a proper understanding of the IP FY24 Profit Forecast have not been disclosed
or if any material assumption made by the Directors appears to us to be
unrealistic.
We planned and performed our work so as to obtain the information and
explanations we considered necessary in order to provide us with reasonable
assurance that the IP FY24 Profit Forecast has been properly compiled on the
basis stated.
Our work has not been carried out in accordance with auditing or other
standards and practices generally accepted in jurisdictions outside the United
Kingdom, including the United States of America, and accordingly should not be
relied upon as if it had been carried out in accordance with those standards
and practices. We have not consented to the inclusion of this report and our
opinion in any registration statement filed with the SEC under the US
Securities Act of 1933 (either directly or by incorporation by reference) or
in any offering document enabling an offering of securities in the United
States (whether under Rule 144A or otherwise). We therefore accept no
responsibility to, and deny any liability to, any person using this report and
opinion in connection with any offering of securities inside the United States
of America or who makes a claim on the basis they had acted in reliance on the
protections afforded by United States of America law and regulation.
Since the IP FY24 Profit Forecast and the assumptions on which it is based
relate to the future and may therefore be affected by unforeseen events, we
can express no opinion as to whether the actual results reported will
correspond to those shown in the IP FY24 Profit Forecast and differences may
be material.
Yours faithfully
Deloitte LLP
Deloitte LLP is a limited liability partnership registered in England and
Wales with registered number OC303675 and its registered office at 1 New
Street Square, London EC4A 3HQ, United Kingdom. Deloitte LLP is the United
Kingdom affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche
Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"). DTTL and
each of its member firms are legally separate and independent entities. DTTL
and Deloitte NSE LLP do not provide services to clients. Please see
www.deloitte.com/about to learn more about our global network of member firms.
PART C
Report from BofA Securities on IP FY24 Profit Forecast
The Board of Directors
on behalf of International Paper Company
6400 Poplar Ave
Memphis, TN
38197
United States of America
23 August 2024
Dear Sirs/Mesdames,
RECOMMENDED ALL-SHARE COMBINATION OF DS Smith PLC ("DS Smith") WITH
INTERNATIONAL PAPER COMPANY ("International Paper")
We refer to the IP FY24 Profit Forecast set out and as defined in Part A of
the Appendix to the announcement by International Paper dated 27 August 2024
(the "Announcement"), for which the directors of International Paper (the
"Directors") are solely responsible under Rule 28 of the City Code on
Takeovers and Mergers (the "Code").
We have discussed the IP FY24 Profit Forecast (including the assumptions
referred to therein), with the Directors and those officers and employees of
International Paper who developed the underlying plans, as well as with
Deloitte LLP ("Deloitte"). The IP FY24 Profit Forecast is subject to
uncertainty as described in this Announcement and our work did not involve an
independent examination of any of the financial or other information
underlying the IP FY24 Profit Forecast.
We have relied upon the accuracy and completeness of all the financial and
other information provided to us by, or on behalf of, International Paper, or
otherwise discussed with or reviewed by us, and we have assumed such accuracy
and completeness for the purposes of providing this letter.
We do not express any opinion as to the achievability of the IP FY24 Profit
Forecast.
We have also reviewed the work carried out by Deloitte and have discussed with
them the opinion set out in Part B of the Appendix to this Announcement
addressed to yourselves and ourselves on this matter.
This letter is provided to you solely in connection with Rule 28.1(a)(ii) of
the Code and for no other purpose.
We accept no responsibility to International Paper or its shareholders or any
person other than the Directors in respect of the contents of this letter. We
are acting as financial adviser to International Paper and no one else in
connection with the proposed transaction and it was for the purpose of
complying with Rule 28.1(a)(ii) of the Code that International Paper requested
us to prepare this report on the IP FY24 Profit Forecast. No person other than
the Directors can rely on the contents of this letter, and to the fullest
extent permitted by law, we exclude all liability (whether in contract, tort
or otherwise) to any other person, in respect of this letter, its results, or
the work undertaken in connection with this letter, or any of the results that
can be derived from this letter or any written or oral information provided in
connection with this letter, and any such liability is expressly disclaimed
except to the extent that such liability cannot be excluded by law.
On the basis of the foregoing, we consider that the IP FY24 Profit Forecast,
for which you as the Directors are solely responsible, has been prepared with
due care and consideration.
Yours faithfully,
Merrill Lynch International ("BofA Securities")
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