Mondi is set to buy its smaller rival DS Smith for £5.1bn, the firms revealed in a stock exchange announcement.
The deal, which had been rumoured since last month, saw Amazon packaging giant DS Smith’s shares jump 11 per cent on the day.
Now, the two firms confirmed the agreement for a possible takeover, which will see Mondi shareholders owning 54 per cent of the company, and DS Smith shareholders 46 per cent.
The deal would see DS Smith shareholders receive a premium of 33 per cent from Mondi, based off the share price from 7 February, when the offer period began.
Philip Yea would continue as chair, Andrew King will continue as CEO and Mike Powell will continue as chief financial officer of the enlarged Mondi, with three non-executive directors of DS Smith joining the Mondi board.
The firms said the takeover would create a “pan-European industry leader in paper-based sustainable packaging solutions”, citing their complementary geographic footprints, leading customer relationships and a strong balance sheet and cash flow profile.