DAVY VIEW

On March 6th, DS Smith will issue a Q3 FY24E update on trading from its December 2023 interim results to date. We expect DS Smith will (1) return to c.2% organic box volume growth in recent months, with (2) trading in-line with FY24E consensus (£698m EBITA). On February 8th, DS Smith confirmed merger discussions with Mondi. While we do not expect a merger update on March 6th, with DS Smith trading at c.39% CY24E P/E discount to Mondi, our updated merger analysis (see page 4) indicates that Mondi could offer £4.00/share for DS Smith, while delivering 18% Mondi FY25E EPS accretion and maintaining Mondi’s investment grade rating.