Hopes grew that the City could see its biggest merger in years, as packaging giant DS Smith confirmed that rival Mondi has made a “highly preliminary expression of interest” about a combination of the two FTSE 100 firms.
The news comes just a day after housebuilders Barratt and Redrow agreed to combine in a £2.5 billion deal. That merger announcement followed a 2023 that was characterised by a dearth of dealmaking. Of the deals that did happen, most of the most valuable involved private equity buyouts of listed firms, which raised questions about the strength of London’s markets.
With talk of a second FTSE 350 tie-up making the news in the space of just two days, it appears that there could be a rebound for London mergers in 2024. That will be a relief to City dealmakers, who risked losing their jobs as their employers struggled to broker big-money combinations and buyouts.
DS Smith said: “The board of DS Smith understands that Mondi is considering a possible offer for DS Smith although no proposal has been received at this stage.
“There can be no certainty as to whether any proposal will be made or the terms of any such proposal. A further announcement will be made if and when appropriate.”The news of a potential deal follows Irish packaging giant revealing plans to merge with American firm WestRock and leave the FTSE 100.
DS Smith shares rose by as much as 13.4% today to 318.9p. That values the firm at £4.3 billion.
Mondi shares, which were up for the day before the announcement, fell by 84p to 1334p, which would mean a market cap of £5.9 billion.