The Lemon Fool

Mondi proposing all share takeover of DS Smith at equivalent of 373p per DS Smith share. Nothing final yet, extended to 04/04/24.

https://markets.ft.com/data/announce/de ... SCL_0112-1

I'm finding it difficult to get my fogged brain round this. I hold both and am losing on both, considerably more on Mondi than on Smith. I don't understand how Mondi gets to be the leading light. Should I be pleased or just resigned?

Bouleversee wrote:I'm finding it difficult to get my fogged brain round this. I hold both and am losing on both, considerably more on Mondi than on Smith. I don't understand how Mondi gets to be the leading light. Should I be pleased or just resigned?

The silver lining is that you won't be losing as much on your DS Smith shares. Then, they'll be swapped for Mondi shares, providing the deal is finally agreed. So, you'll end up with more shares in Mondi and no DS Smith holding because it'll be just part of a larger Mondi.

BullDog wrote:

Bouleversee wrote:I'm finding it difficult to get my fogged brain round this. I hold both and am losing on both, considerably more on Mondi than on Smith. I don't understand how Mondi gets to be the leading light. Should I be pleased or just resigned?

The silver lining is that you won't be losing as much on your DS Smith shares. Then, they'll be swapped for Mondi shares, providing the deal is finally agreed. So, you'll end up with more shares in Mondi and no DS Smith holding because it'll be just part of a larger Mondi.

Thanks, BullDog. Yes. I shall be making a tiny profit in fact but presumably that is why the Mondi loss is bigger. I see there are a lot more posts on this board so will read them. Not sure I want to be stuck with Mondi. I wonder what their s.p. will be after all this has gone through. Too involved in other important issues to devote much time to this, however..

Bouleversee wrote:

BullDog wrote:The silver lining is that you won't be losing as much on your DS Smith shares. Then, they'll be swapped for Mondi shares, providing the deal is finally agreed. So, you'll end up with more shares in Mondi and no DS Smith holding because it'll be just part of a larger Mondi.

Thanks, BullDog. Yes. I shall be making a tiny profit in fact but presumably that is why the Mondi loss is bigger. I see there are a lot more posts on this board so will read them. Not sure I want to be stuck with Mondi. I wonder what their s.p. will be after all this has gone through. Too involved in other important issues to devote much time to this, however..

Good luck. I want neither DS Smith nor Mondi shares. For me it's a quite rare case of a plan coming good. I have put in a limit sell order on my SMDS shares which hopefully will trigger and I'll exit DS Smith with a decent profit of around 50% plus dividends received. That'll help offset losses elsewhere.

Otherwise, if the limit sell order doesn't trigger, I'll wait until I get Mondi shares and then sell them.

BullDog wrote:

BullDog wrote:The offer is in. 373p. Perhaps a bit stingy from Mondi. But I'll set a limit sell in the morning if the SMDS shares bounce, as they should. Only question is what to set it at? I'll mull that one over.

RNS -

https://www.lse.co.uk/rns/SMDS/statemen ... 7bowc.html

Hmmm. Only up less than 6% this morning. Looks like Plan B for me.

Whats Plan B Bulldog ? think there is somebody waiting in the wings with a better offer ?

Turf wrote:

BullDog wrote:Hmmm. Only up less than 6% this morning. Looks like Plan B for me.

Whats Plan B Bulldog ? think there is somebody waiting in the wings with a better offer ?

Plan B is sit and wait, then if the deal goes ahead, sell the Mondi shares. No, I don't think there's another bidder in the frame presently. Longer term? Maybe a buyer will emerge for the enlarged Mondi. Who knows?

BullDog wrote:

Bouleversee wrote:
Thanks, BullDog. Yes. I shall be making a tiny profit in fact but presumably that is why the Mondi loss is bigger. I see there are a lot more posts on this board so will read them. Not sure I want to be stuck with Mondi. I wonder what their s.p. will be after all this has gone through. Too involved in other important issues to devote much time to this, however..

Good luck. I want neither DS Smith nor Mondi shares. For me it's a quite rare case of a plan coming good. I have put in a limit sell order on my SMDS shares which hopefully will trigger and I'll exit DS Smith with a decent profit of around 50% plus dividends received. That'll help offset losses elsewhere.

Otherwise, if the limit sell order doesn't trigger, I'll wait until I get Mondi shares and then sell them.

They seem to be sitting just under 350p this morning.

I have two holdings one in my ISA that I was planning on keeping and one in my GIA that was to be sold prior to tax year end as part of my reduction in dividends in taxable accounts to less than the £500 allowance for next year and to use up this years CGT allowance (as that is also reducing next year) and my SMDS holding is sitting on significant gains.

What to do? The ISA holding I'll just leave, take the MONDI shares when/if the deal goes ahead and think about whether to keep or sell MONDI once/if I'm a holder.

What to do with the GIA holding? SMDS has not approached close to the 373p implied price mentioned in the RNS. Is that because there is significant doubt the deal will go ahead, if so, and the price falls back I should sell now and could buy back in the ISA at a later date at a cheaper price/higher yield. Or is it because the MONDI price has fallen so the actual price from the todays valuation of MONDI shares is in line with what would be expected if the deal goes ahead. Which implies the market thinks MONDI is over paying. Or should I wait and see what happens and hope the price moves up if I wait?

I've just done a bit of calculating. My calculations from the values given in the RNS suggest that SMDS holders should receive ~0.2701of a MONDI share for every SMDS share held. The price of a MONDI share this morning was 1357 (down from the 1381 just prior to the deal being first announced) implying an SMDS share is worth 366 at todays MONDI share price - so todays SMDS share price of 349 (when I last looked) is below that. Which to me suggests the market thinks there is some chance the deal may not go ahead and it doesn't think there is likely to be a higher offer out there.

I think I will wait and see what happens with the price next week before deciding when to sell my GIA holding.

daveh wrote:I've just done a bit of calculating. My calculations from the values given in the RNS suggest that SMDS holders should receive ~0.2701of a MONDI share for every SMDS share held. The price of a MONDI share this morning was 1357 (down from the 1381 just prior to the deal being first announced) implying an SMDS share is worth 366 at todays MONDI share price - so todays SMDS share price of 349 (when I last looked) is below that. Which to me suggests the market thinks there is some chance the deal may not go ahead and it doesn't think there is likely to be a higher offer out there.

I think I will wait and see what happens with the price next week before deciding when to sell my GIA holding.

That is also my thinking. However, I kind of doubt yesterday's tentative deal would have been announced had the big institutional investors not been sounded out and given it an off the record blessing. I kind of think that there would have been no deal had both boards not had very high confidence of it going through. I therefore am presently of the opinion that the deal will go ahead but with many small investors saying no to it. I have a limit sell order in place but I'm not expecting it to be met at the present time.

daveh wrote:I've just done a bit of calculating. My calculations from the values given in the RNS suggest that SMDS holders should receive ~0.2701of a MONDI share for every SMDS share held. The price of a MONDI share this morning was 1357 (down from the 1381 just prior to the deal being first announced) implying an SMDS share is worth 366 at todays MONDI share price - so todays SMDS share price of 349 (when I last looked) is below that. Which to me suggests the market thinks there is some chance the deal may not go ahead and it doesn't think there is likely to be a higher offer out there.

I think I will wait and see what happens with the price next week before deciding when to sell my GIA holding.

The deal isn't final, they are working out the likely value of any benefits to both companies from a merger and it would require regulatory approval as well, so there's still some uncertainty over it. Hence the discount.

I built up a modest position in SMDS over the last few years for income. In capital terms the proposed deal hands me about a 30% profit. If a merged entity provided a roughly comparable amount of income with (presumably) a better chance of future growth I'd be happy enough to keep it in the portfolio. If not I'll use the cash to replace the income elsewhere.

EEM

Hmmm. Something to perk up the DS Smith bid? I hope so.

Sharecast News) - New York-listed paper producer International Paper is reportedly mobilising to gatecrash a £5.1bn takeover of DS Smith.

According to Sky News, International Paper has indicated to DS Smith that it wants to launch a formal counterbid to trump an agreed offer from DS Smith by London-listed Mondi.

Apparently now confirmed as true by DS Smith.

https://www.msn.com/en-gb/money/other/international-paper-boxes-clever-with-5bn-plus-ds-smith-counterbid/ar-BB1kzBaV

415p on the table from International Paper. Bring on the bidding war please

Gosh! I might even escape with a small profit

My average buy price is a little over £4-00. A poorly researched investment bought with little thought during Covid and then topped up (averaged down) since.

Best wishes,

Steve

BullDog wrote:415p on the table from International Paper. Bring on the bidding war please

Damn. I just sold at 353 this morning to use up some of this year's CGT allowance. Had to do it today or tomorrow as I'm off skiing over Easter. Still have a larger holding in an ISA though.

BullDog wrote:415p on the table from International Paper. Bring on the bidding war please

Meantime, International Paper shares are >6.2% down today. Shareholders there apparently not so happy, it seems. That values an all paper bid from IP for SMDS at ~389p.

DS SMITH IN TALKS WITH INTERNATIONAL PAPER ABOUT POSSIBLE TAKEOVER

A bidding war was potentially on the cards on Tuesday as packaging company DS Smith - which recently agreed to be taken over by Mondi - confirmed it is in talks with New York-listed International Paper about a possible takeover offer.
Under the terms of the proposal, DS Smith shareholders would receive 0.1285 shares in International Paper for each of theirs, meaning they would own around 33.8% of the combined entity.

Based on International Paper's share price of $40.85 at the close on Monday, this represents 415p and a premium of 45% to the closing DS Smith share price on 7 February, which was the last day before the start of the offer period with Mondi.

"The board acknowledges the strategic merits and potential for value creation through a combination with International Paper," DS Smith said.

"Accordingly, the board is progressing its discussions with International Paper regarding the proposal."

It added that there can be certainty as to whether any offer will be made nor the terms of any such offer.

International Paper has until 23 April to either announce a firm intention to make an offer or walk away.

https://www.hl.co.uk/shares/shares-sear ... dinary-10p

The above quote is from an item in the company news area of the above HL page for SMDS.

SMDS are up 7.5% as I type.

Ian (No holding).

Smiths DS breached my 175% median holding limit in my portfolio this morning. I trimmed them back to 125%. After IMB, BP, and BHP have paid their dividends tomorrow I should have about 2/3rds of a median holding to reinvest. Time to wheel out HYPTUSS, give it a dust off, and see if she'll start. C.

Sold today. With the price of IP shares falling, today their bid is worth around mid 390's pence. Sold in the market close to that rather than wait as I don't see a huge amount of upside from here.

DS Smith extends Mondi offer deadline by two weeks
https://www.sharecast.com/news/news-and-announcements/ds-smith--16547594.html

DS Smith, the packaging group at the centre of a a bidding war between UK-listed Mondi and US firm International Paper, has extended the so-called 'put up or shut up' deadline for the former to make a firm offer. [...] Then on 26 March, DS Smith announced that it had received a £5.72bn offer from International Paper, and was said to be "progressing its discussions" regarding a deal. International Paper has until 23 April to make a firm offer.
Mondi had until the close of play on Thursday to announce a firm intention to make an offer, but this deadline has now been extended to 23 April.