International Paper Announces Agreement to Acquire DS Smith

April 16, 2024 - International Paper (NYSE: IP, "IP") and DS Smith Plc (LSE: SMDS, "DS Smith") today announced that they have reached agreement on the terms of a recommended all-share combination (the "Combination"), creating a truly global leader in sustainable packaging solutions.

The terms of the Combination value each DS Smith share at 415 pence per share¹, and will result in IP issuing 0.1285 shares for each DS Smith share, resulting in pro forma ownership of 66.3 percent for IP shareholders and 33.7 percent² for DS Smith shareholders, implying a transaction value of approximately $9.9 billion³. The Combination is expected to close by the fourth quarter of 2024.

"Combining with DS Smith is a logical next step in IP's strategy to drive profitable growth by strengthening our global packaging business," said Mark S. Sutton, Chairman and CEO of IP. "DS Smith is a leader in packaging solutions with an extensive reach across Europe, which complements IP's capabilities and will accelerate growth through innovation and sustainability. We are confident this combination will drive significant value for our employees, customers, and shareholders."

CEO-Elect of IP, Andrew K. Silvernail added, "Bringing together the capabilities and expertise of both companies will create a winning position in renewable packaging across Europe, while also enhancing IP's North American business. I firmly believe this strategic combination offers a unique and highly compelling opportunity to create tremendous shareholder value. I am also committed to working with the teams to deliver the expected synergies, along with the ongoing profit improvement initiatives across the IP portfolio."

CEO of DS Smith, Miles Roberts, said, "The combination with IP is an attractive opportunity to create a truly international sustainable packaging solutions leader that is well positioned in attractive and growing markets across Europe and North America. It combines two focused and complementary businesses. DS Smith has grown significantly through a dedication to customers, focus on innovation, quality of packaging and high levels of service. In a dynamic sustainable packaging landscape, the combination will enhance our global proposition to customers, create opportunities for colleagues and drive value for shareholders who can remain fully invested in such an exciting business. I am proud of all that DS Smith has achieved to date and am sure that the business will continue to flourish as part of a combined group with IP due to the capability and continued commitment of our colleagues."

Compelling Strategic Opportunity

• Creates a global leader in sustainable packaging solutions, focused on the attractive and growing North American and European regions
  • Establishes a differentiated corrugated packaging company with approximately 90% of revenue from sustainable fiber-based packaging.
  • Expands IP's footprint and capabilities in the attractive European region.
    • Combines DS Smith's extensive European sales of $9.4 billion⁴ in FY23 with IP's European sales of $1.5 billion in FY23.
  • Enhances IP's business in North America's eastern region with the addition of DS Smith's complementary box network.
• Complementary business models increase vertical integration to improve profitability
  • Integration of approximately 500-600k tons of containerboard from DS Smith into the IP mill system will increase the combined integration rate to approximately 90%.
  • Optimizes the combined network of mills, box plants, and supply chains.
• Strengthens customer value proposition through enhanced offerings, innovation, and geographic reach
  • Enhances ability to serve global customers with a highly complementary, quality portfolio and broader product offerings.
  • Increases exposure to the attractive, fast-moving consumer goods and e-commerce segments.
  • Greater opportunity for cross-selling products and services across respective regional and global customers.
  • Combines market and commercial expertise, and innovation capabilities.
  • Generates revenue synergies primarily from incremental sales generated by DS Smith's Innovation Network being extended to IP's European customers.
• Accelerates sustainability, including through innovation, for the benefit of all stakeholders
  • Combines IP and DS Smith's experienced management teams to accelerate innovative sustainable solutions and advance the circular economy.
  • Expands a portfolio of sustainable products to meet customers' evolving preferences.
  • Aligns commitment to grow responsibly through environmental stewardship, community engagement, and strong corporate governance.
• Similar cultures and experienced teams ensure low integration and operational risk
  • Shared purpose-driven cultures with a relentless focus on sustainability, responsible growth, positively impacting communities and a commitment to creating innovative solutions that meet customer needs.
  • Intention to retain DS Smith's London headquarters as IP's new EMEA headquarters.
  • Both the IP and DS Smith teams, including IP CEO-Elect Andrew K. Silvernail, have expertise and experience in successfully integrating large scale acquisitions.

Transaction Structure

The Combination will be structured as an acquisition of DS Smith by IP and implemented in accordance with the rules of the Code and English law. IP will issue 0.1285 for each DS Smith share, equal to 179,948,967 shares.

Upon completion of the Combination, any new IP Shares issued to DS Smith shareholders will be authorized for primary listing on the New York Stock Exchange subject to official notice of issuance. IP also intends to seek a secondary listing of its shares on the London Stock Exchange.

The Combination is expected to close by the fourth quarter of 2024, subject to IP and DS Smith shareholder approval and customary closing conditions, including receipt of regulatory clearances, in Europe and the U.S.

Governance and Leadership

Andrew K. Silvernail will be CEO of the combined company and Miles Roberts will be retained as a consultant to assist with integration matters. As part of the Combination, up to two non-executive directors of DS Smith will be invited to join the Board of the combined company upon close of the Combination.

The combined company will be headquartered in Memphis, Tennessee, with plans to establish an EMEA headquarters at DS Smith's existing London headquarters.

The full Announcement and further information is available on: International Paper's website.

About DS Smith
DS Smith is a leading provider of sustainable fiber-based packaging worldwide, which is supported by recycling and papermaking operations. It plays a central role in the value chain across sectors including e-commerce, fast moving consumer goods, and industrials. The company operates in 34 countries employing around 30,000 people and is a Strategic Partner of the Ellen MacArthur Foundation.

International Paper is a global provider of renewable fiber-based packaging and pulp products, and one of the world's largest recyclers. Headquartered in Memphis, Tenn., IP employs approximately 40,000 colleagues globally who are committed to creating what's next. The company serves customers worldwide, with manufacturing operations in North America, Latin America, North Africa, and Europe. Net sales for 2023 were $18.9 billion.

SOURCE: International Paper

65 Metric-Ton Pulp-Producing Piece of Equipment Moves Through JAXPORT

Feb. 28, 2024 - JAXPORT and terminal operator Seaonus recently facilitated the move of a 65 metric-ton washer drum (equipment used for pulp manufacturing) through the port’s Talleyrand Marine Terminal in Jacksonville, Florida.

Owned by American paper and pulp manufacturer and distributor Georgia Pacific, the drum is a type of project cargo due to its large size, spanning 32 feet long and 15 feet wide. It moved from Europe to Jacksonville, Florida, onboard the Spliethoff breakbulk vessel Sampogracht and was lifted off the ship onto a special trailer used for transporting big pieces of cargo.

The drum will replace existing equipment at the company’s Brunswick, Georgia mill to produce better pulp for their global customers.

The company said JAXPORT’s diverse facilities and level of flexibility enable them to move cargo to their manufacturing facilities as quickly as possible.

“We have been moving cargo through JAXPORT for over three decades, and we have always had a level of care and attention from not only the port but also its partners that has kept us coming back year after year for our critical projects in our supply chain.” – Doug Connell, Georgia Pacific Supply Chain Manager.

Georgia Pacific operates three facilities throughout Northeast Florida and Southeast Georgia, producing household paper products, including paper towels, bath tissue, and cups.

SOURCE: Jacksonville Port Authority (JAXPORT) 

Metsä Group's Kemi Bioproduct Mill Ensures Efficient Logistics

Feb. 26, 2024 - In response to the needs of Metsä Group's new bioproduct mill in Kemi, an efficient and reliable logistics solution has been developed, taking into account sustainability at every stage of operation and minimizing environmental impacts.

Pulp bales produced at the bioproduct mill are automatically loaded onto HCT (High Capacity Transport) trucks. These trucks, powered by biodiesel, transport the bales to a port warehouse located 15 kilometers away. The specially designed HCT truck can carry approximately 72 tons of pulp load at once, about 1.5 times more than a standard truck load. These solutions significantly reduce the carbon footprint of transportation.

A new logistics route, built in collaboration with the city of Kemi, enhances transportation and traffic safety in the area.

At the Ajos port, pulp bales are directed to Metsä Group's new 37,000 square meter product warehouse, where unloading is automated. Fossil fuels in the port and warehouse have been replaced with electrified forklift and loading equipment. Additionally, the port's electronic material handling crane features an electronic pulp grab, the first of its kind.

Eight new electric forklifts at the port improve environmental efficiency and enhance workplace safety. The elevated cabin, improved visibility, and lower noise levels contribute to a safer working environment.

For pulp shipments to Asian markets, the mill uses the latest vessel fleet where the technology enhances environmental efficiency.

"The foundation of the new logistics solution is to ensure safety, delivery reliability, and environmental efficiency. It secures a smooth chain from the mill to customers," says Pasi Pulkkinen, who was the Logistics Director for the Kemi bioproduct mill project.

"The core process of port operations remains the same as before, but with the latest equipment investments, the opportunities to improve operations in every aspect have grown significantly," explains Teemu Kauppi, Director of Kemi Port Operations unit. With the new bioproduct mill, the export from Ajos port in Kemi abroad is expected to increase by over a million tons annually.

SOURCE: Metsä Group

UPM Pulp’s Regular Customer Surveys Provide Valuable Input for Development of Services

By Timo Nykänen for UPM Pulp

Nov. 9, 2023 - Through customer surveys, UPM Pulp is able to deepen its knowledge of customer attitudes, thoughts and perceptions. Surveys have provided valuable insights to help further improve the company’s standards of excellence and offer a tool for continuous development that brings an external customer dimension to performance management.

UPM Pulp conducts a survey twice a year to measure customer satisfaction. The survey has been carried out in its current form for three years and this is sent out to around 500 customer contacts. According to Miikka Kangas, Senior Manager Commercial Development, Pulp Sales at UPM Pulp, the aim has been to keep the survey light and simple, with only two main questions. The first of these refers to the global NPS (Net Promoter Score) metric, allowing for industry benchmarking and providing a target for development.

“We ask customers how likely they are to recommend UPM Pulp to their friends or colleagues, and how well they consider us to have performed compared to the pulp industry in general with regards to certain criteria. These include pulp quality and service, handling exceptional situations, and listening to and understanding customers,” Kangas explains.

The latest NPS score was 46, comparing well to the benchmark average of 39. However, UPM has set a target NPS score of 53, which would place the company in the top 25% within the industry.

Combining General Satisfaction and Topical Issues

Although the survey is mainly a “happy or not” type of questionnaire, additional feedback can be provided to open questions on how, in the customer’s view, UPM Pulp could improve on each of these issues. According to Kangas, one of the most common topics touched upon in open comments is the need for more communication, which he admits is something where you can never have too much. The survey also includes a region-specific question that may vary between surveys.

“In the latest survey carried out between October and November 2023, we asked customers in Europe about their experiences concerning the performance of our customer service, while in the APAC region the additional question concerned the digitalisation of services and solutions. Perhaps an upcoming question could be related to the ramp-up period of our Paso de los Toros mill and how we have lived up to customer expectations concerning communication of the different phases,” Kangas says.

Follow-up in Dedicated Customer Teams

Run for about two weeks in more than 20 languages, the survey typically reaches a response rate of around 30-40%. The NPS score measuring customer loyalty has remained at a stable level – with the notable exception of a drop in the curve in 2022, when UPM suffered from industrial action in Finland.

“This was a completely understandable reaction, but we luckily recovered from the situation rather swiftly. This was reflected in very few mentions in open comments in the following survey after resuming normal operations,” says Tomas Wiklund, Senior Vice President, Pulp Sales at UPM Pulp.

Wiklund emphasises the importance of the survey in the constant development of UPM Pulp’s offering, as the feedback is not anonymous, and can thus be responded to promptly and precisely. UPM Pulp’s external research partner provides analysis and conclusions on the survey results, which are examined on both a global and regional level. Analysis is also carried out in customer teams, and corrective actions are taken where necessary.

“Our customer teams follow the results according to each customer and see if we have managed to follow the path of continuous improvement, or if there is some issue that stands out and requires addressing immediately,” Wiklund notes.

Feedback Makes a Difference

Considering the attributes that customers value most, quality takes the top spot with a clear margin, followed by customer service then reliability in third place. According to Kangas, a positive signal is also that around half of the respondents are regular participants in the survey and they are committed to delivering feedback repeatedly.

“I would like to thank all our customers for their active participation and urge everyone who hasn’t yet responded to take part in our next survey. Your feedback is extremely valuable to us and truly makes a difference in further strengthening our cooperation,” Wiklund concludes.

SOURCE: UPM Pulp