British packaging giant DS Smith will try to reassure shareholders that its £5.8billion sale to International Paper is still on track on Thursday when it presents its annual results.
Back in April, DS Smith agreed to sell itself to International Paper in an all-share deal that would leave its shareholders with 33.7 percent of the combined company.
As part of the deal, International Paper would take a secondary listing of its shares on the London Stock Exchange.
However, since then, International Paper has found itself fighting off a £12billion-plus takeover bid from Brazilian giant Suzano.
It is thought that Suzano’s offer is contingent on the DS Smith deal being abandoned.
Aside from trying to reassure shareholders about the International Paper deal, DS Smith chief executive Miles Roberts is expected to say the business is in good shape even though weaker consumer sentiment has hit key clients like Amazon and inflation has increased its costs.
For the 12 months to the end of April, DS Smith’s revenues are tipped to be down 14.6 percent to £7billion, while its pre-tax profits are forecast to drop 18 percent to £542.2million.
AJ Bell investment director Russ Mould said: “Any comment on the International Paper-Suzano-DS Smith love triangle may dominate how the market sees the results.”
Matt Britzman, equity analyst at Hargreaves Lansdown, said DS Smith is a solid business.
He said: “Price hikes and volume improvements should help support earnings this year. Demand shifts like the move from plastic to paper should hold it in good stead.”
