In a significant development for the UK's financial landscape, paper and packaging titan DS Smith is poised to make a dramatic return to the London market. This comes merely a year after the company vanished from the London Stock Exchange following its acquisition by American rival International Paper in a monumental £5.8 billion deal.
A Strategic Separation
Memphis-based International Paper has unveiled plans to de-merge its European, Middle East, and Africa (EMEA) division. This unit is largely comprised of the former DS Smith business. The strategic move will involve a dual listing of this new entity on both the London and New York stock exchanges, marking a swift reversal of the previous consolidation.
Timeline and Ownership Structure
International Paper anticipates completing this complex spin-off process within the next 12 to 15 months, pending crucial shareholder approval. The US firm has indicated it intends to retain a "meaningful ownership stake" in the newly independent company, which is expected to reclaim the DS Smith name. This follows a year of integration that created one of the globe's largest packaging manufacturers.
Streamlining and Investment
Since the acquisition, International Paper has been actively streamlining its European operations. Last May, the company announced plans to close five UK sites, putting approximately 300 jobs at risk, as part of cost-cutting measures following the merger. Despite this, the parent company has committed to continued investment in the EMEA division ahead of the split.
An impressive $400 million (approximately £289 million) has been earmarked for the unit this year alone. The EMEA business currently operates across 30 countries and will encompass the regional operations of both DS Smith and International Paper, forming a substantial regional powerhouse.
Leadership Perspectives on the Move
International Paper's chairman and chief executive, Andy Silvernail, explained the rationale behind the decision. "During the past year, we have created two regional powerhouses with scale, strong customer relationships, leading brands and talented teams," he stated.
Silvernail emphasised that the two businesses operate in "distinct market environments" and are at "different stages of their transformation." He added, "We have learned a lot about how to create value in each region. The next right step in our transformation journey to achieve full value creation potential is to create two independent, regionally-focused companies."
He believes this "swift, decisive action" will enable both entities to reach "best-in-class performance" and maximise long-term value through enhanced focus and targeted investment.
Integration and Market Adaptation
Tim Nicholls, executive vice-president of DS Smith EMEA, reflected on the period of significant change. "The past 18 months have brought significant change across our industry and our markets," he noted.
"In that time, we have acted decisively to reshape our EMEA business – integrating our operations, simplifying our structure and ensuring our sites are aligned to the needs of our customers." This preparation appears to have laid the groundwork for the planned return to independence and public listing.
The proposed spin-off represents a major strategic pivot for International Paper and a notable second act for the DS Smith brand on the London market, highlighting the dynamic nature of global corporate restructuring and the enduring appeal of London as a financial hub for major industrial players.
