NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, INTO OR FROM ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
FOR
IMMEDIATE RELEASE
24 July
2024
INTERNATIONAL PAPER
COMPANY
PUBLICATION OF SECOND QUARTER
2024 RESULTS
International Paper Company
("International Paper") has
today published its second quarter 2024 financial results and held
an earnings presentation. Copies of the second quarter 2024
press release, earnings presentation and reconciliation of non-GAAP
financial measures are available at
https://www.internationalpaper.com/investors/financial-reports/quarterly-results.
During the earnings presentation,
the following statements were made, which for the purposes of Rule
28.1(a) of the City Code on Takeovers and Mergers (the
"Code") constitutes a
profit forecast published by International Paper during an offer
period (the "IP Q3 Profit
Forecast"):
"3Q24 Outlook: Lower earnings due to volume decline and higher
costs, offsetting benefits from prior price index
increases."
"[With respect to Industrial Packaging]
[E]arnings are expected to be down sequentially in the third
quarter by approximately $160 million... we expect price and mix to
improve earnings by $60 million sequentially… Volume is expected to
decrease earnings by $65 million…. We expect Operations and Costs
to decrease earnings by $80 million…
Higher maintenance outage expense
is expected to decrease earnings by $44 million. And lastly, higher
input costs are expected to decrease earnings by $30
million….
[With respect to Global Cellulose Fibers]
[E]arnings will
be relatively flat… we expect price and mix to increase earnings by
$10 million…Volume is expected to decrease earnings in the third
quarter by $5 million… We expect Operations and costs to decrease
earnings by $25 million…Lower maintenance outage expense is
expected to increase earnings in the third quarter by $25 million.
And lastly, input costs are expected to be
stable."
Confirmations
Pursuant to Note 2(b) to Rule 28.1
of the Code, the Panel has granted International Paper a
dispensation from the requirement to include reports from reporting
accountants and International Paper's financial advisers in
relation to the IP Q3 Profit Forecast because it was an ordinary
course profit forecast and DS Smith has agreed to the
dispensation.
In accordance with Rule 28.1(c)(i)
of the Code, the International Paper Directors confirm that the IP
Q3 Profit Forecast has been properly compiled on the basis of the
assumptions stated below and that the basis of accounting used is
consistent with International Paper's accounting
policies.
Assumptions
International Paper has prepared the
IP Q3 Profit Forecast based on its consolidated financial
statements for the period ended 31 December 2023 and its first and
second quarter 2024 financial results.
The IP Q3 Profit Forecast is based
on the following assumptions:
Factors outside the influence or control of the International
Paper Directors
(a) no
changes to existing prevailing macroeconomic, regulatory or
political conditions in the markets and regions in which
International Paper operates that would materially affect
International Paper;
(b) the
inflation and tax rates in the markets and regions in which
International Paper operates remaining materially unchanged from
the prevailing rates;
(c) no
material adverse events that could have a significant impact on
International Paper's financial performance, including litigation,
adverse weather events or natural catastrophes that affect key
products, supply chain or markets or the construction
process;
(d) no
material changes in market conditions over the forecast period to
30 September 2024, in relation to either customer demand or
competitive environment;
(e) no
material impact on stakeholder relationships arising from the
Combination;
(f) no
material adverse outcome from any ongoing or future disputes with
any customer, competitor, regulator or tax authority;
(g) no
material change in International Paper's employee attrition rates
and labour costs, including medical and pension and other
post-retirement benefits driven by external parties or
regulations;
(h) no
material changes in legislation, taxation, regulatory requirements,
applicable standards or the position of any regulatory bodies
impacting on International Paper's operations or on its accounting
policies; and
(i) no
material change to International Paper's ability to access the
global capital markets.
Factors within the influence or control of the International
Paper Directors
(a) no
material change to the present management of International Paper
prior to 30 September 2024 (for the avoidance of doubt, other than
changes related to the Combination);
(b) no major
corporate acquisitions or disposals, developments, partnership or
joint venture agreements being entered into by International Paper,
prior to 30 September 2024 (for the avoidance of doubt, other than
the Combination);
(c) no
material changes in the dividend or capital policies of
International Paper;
(d)
International Paper's accounting policies being consistently
applied over the forecast period; and
(e) no
material change in the operational structure and strategy of
International Paper.
Timetable
International Paper and DS Smith
continue to progress matters relating to the Combination and expect
that the Scheme Document, International Paper prospectus and
International Paper Proxy Statement will be published, and the
related Court Meeting, DS Smith General Meeting and International
Paper Shareholder Meeting will be held, in late summer / early
autumn.
Terms used but not defined in this
announcement have the meaning given to them in the Rule 2.7
announcement released by International Paper and DS Smith on 16
April 2024.
Enquiries
International Paper
|
+1 901 419 1731
|
Mark Nellessen
|
|
Jessica Seidner
|
|
BofA Securities (Sole financial adviser to International
Paper)
|
+44 20 7628 1000
|
Luca Ferrari
|
|
Geoff Iles
|
|
Antonia Rowan
|
|
Tom Brown
|
|
FGS
Global (PR adviser to International Paper)
|
+1 212 687 8080
|
Robin Weinberg
|
|
Kelsey Markovich
Hayley Cook
Kate Gorgi
|
|
James Murgatroyd
Gordon Simpson
Edward Treadwell
|
+44 20 7251 3801
|
Disclaimers
Merrill Lynch International ("BofA Securities"), which is
authorised by the Prudential Regulation Authority ("PRA") and
regulated by the Financial Conduct Authority ("FCA") and the PRA in
the United Kingdom, is acting exclusively for International Paper
and for no one else in connection with the matters referred to in
this announcement and will not be responsible to anyone other than
International Paper for providing the protections afforded to its
clients or for providing advice in relation to the matters referred
to in this announcement. Neither BofA Securities, nor any of its
affiliates, owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of BofA Securities in connection with this announcement, any
statement contained herein or otherwise.
In
accordance with the Code, normal United Kingdom market practice and
Rule 14e-5(b) of the US Securities Exchange Act of 1934, as
amended, (the "US Exchange Act"), BofA Securities and its
affiliates will continue to act as exempt principal trader in DS
Smith securities on the London Stock Exchange. These purchases and
activities by exempt principal traders which are required to be
made public in the United Kingdom pursuant to the Code will be
reported to a Regulatory Information Service and will be available
on the London Stock Exchange website at
www.londonstockexchange.com. This information will also be publicly
disclosed in the US to the extent that such information is made
public in the United Kingdom.
Further
information
This announcement is for information purposes only and is not
intended to and does not constitute, or form any part of, an offer,
invitation or the solicitation of an offer to purchase or
subscribe, otherwise acquire, subscribe for, sell or otherwise
dispose of any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Combination or
otherwise.
The Combination will be subject to English law and to the
applicable requirements of the Code, the Panel, the Listing Rules,
the London Stock Exchange and the FCA.
The Combination will be made solely by the Scheme Document,
which will contain the full terms and conditions of the
Combination, including details of how to vote in respect of the
Scheme. Any voting decision or response in relation to the
Combination should be made solely on the basis of the Scheme
Document. DS Smith Shareholders are advised to read the formal
documentation in relation to the Combination carefully once it has
been published. Each DS Smith Shareholder is urged to consult their
independent professional adviser regarding the tax consequences of
the Combination.
This announcement does not constitute a prospectus or a
prospectus equivalent document.
If
you are in any doubt about the contents of this announcement or the
action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or from an independent
financial adviser duly authorised under the Financial Services and
Markets Act 2000,as amended.
This announcement has been prepared for the purpose of
complying with English law and the Code and the information
disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with
the laws of jurisdictions outside England.
Overseas
shareholders
The release, publication or distribution of this announcement
in jurisdictions other than the United Kingdom may be restricted by
law and therefore any persons who are subject to the laws of any
jurisdiction other than the United Kingdom (including Restricted
Jurisdictions) should inform themselves about, and observe, any
applicable legal or regulatory requirements. In particular, the
ability of persons who are not resident in the United Kingdom or
who are subject to the laws of another jurisdiction to vote their
DS Smith Shares in respect of the Scheme at the Court Meeting, or
to execute and deliver Forms of Proxy appointing another to vote at
the Court Meeting on their behalf, may be affected by the laws of
the relevant jurisdictions in which they are located or to which
they are subject. Any failure to comply with applicable legal or
regulatory requirements of any jurisdiction may constitute a
violation of securities laws in that jurisdiction. To the fullest
extent permitted by law, the companies and persons involved in the
Combination disclaim any responsibility or liability for the
violation of such restrictions by any person.
Copies of this announcement and any formal documentation
relating to the Combination are not being, and must not be,
directly or indirectly, mailed or otherwise forwarded, distributed
or sent in or into or from any Restricted Jurisdiction or any
jurisdiction where to do so would constitute a violation of the
laws of such jurisdiction and persons receiving such documents
(including custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send them in or into or from any
Restricted Jurisdiction. Doing so may render invalid any related
purported vote in respect of acceptance of the
Combination.
If
the Combination is implemented by way of an Offer (unless otherwise
permitted by applicable law and regulation), the Offer may not be
made, directly or indirectly, in or into or by use of the mails or
any other means or instrumentality (including, without limitation,
facsimile, e-mail or other electronic transmission, telex or
telephone) of interstate or foreign commerce of, or any facility of
a national, state or other securities exchange of any Restricted
Jurisdiction and the Offer will not be capable of acceptance by any
such use, means, instrumentality or facilities or from within any
Restricted Jurisdiction.
Further details in relation to DS Smith Shareholders in
overseas jurisdictions will be contained in the Scheme
Document.
Additional information for US
investors in DS Smith
The Combination relates to the shares of an English company
and is being made by way of a scheme of arrangement provided for
under Part 26 of the Companies Act. The Combination, implemented by
way of a scheme of arrangement, is not subject to the tender offer
rules or the proxy solicitation rules under the US Exchange Act.
Accordingly, the Combination and the Scheme will be subject to the
disclosure requirements and practices applicable to a scheme of
arrangement involving a target company incorporated in the UK and
listed on the London Stock Exchange, which differ from the
disclosure requirements of US tender offer and proxy solicitation
rules. If, in the future, International Paper exercises its right
to implement the Combination by way of an Offer and determines to
extend the Offer into the United States, the Combination will be
made in compliance with applicable US laws and
regulations.
The New International Paper Shares to be issued pursuant to
the Combination have not been registered under the US Securities
Act of 1933, as amended, (the "US Securities Act"), and may not be
offered or sold in the US absent registration or an applicable
exemption from the registration requirements of the US Securities
Act. The New International Paper Shares to be issued pursuant to
the Combination will be issued pursuant to the exemption from
registration provided by Section 3(a)(10) under the US Securities
Act. If, in the future, International Paper exercises its right to
implement the Combination by way of an Offer or otherwise in a
manner that is not exempt from the registration requirements of the
US Securities Act, it will file a registration statement with the
SEC that will contain a prospectus with respect to the issuance of
New International Paper Shares. In this event, DS Smith
Shareholders are urged to read these documents and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information, and such documents will be available free of charge at
the SEC's website at www.sec.gov or by directing a request to
International Paper's contact for enquiries identified
above.
Neither the SEC nor any US state securities commission has
approved or disapproved of the New International Paper Shares to be
issued in connection with the Combination, or determined if this
announcement is accurate or complete. Any representation to the
contrary is a criminal offence in the United
States.
This announcement contains, and the Scheme Document will
contain certain unaudited financial information relating to DS
Smith that has been prepared in accordance with the accounting
standards applicable in the UK and thus may not be comparable to
financial information of US companies or companies whose financial
statements are prepared in accordance with US generally accepted
accounting principles. US generally accepted accounting principles
differ in certain significant respects from accounting standards
applicable in the UK.
It
may be difficult for US DS Smith Shareholders to enforce their
rights and any claim arising out of the US federal securities laws
against DS Smith or its directors or officers, because DS Smith is
incorporated under the laws of England and Wales, some or all of DS
Smith's assets are or may be located in non-US jurisdictions, and
some or all of its officers and directors are residents of a non-US
country. US DS Smith Shareholders may not be able to sue a non-US
company or its officers or directors in a non-US court for
violations of the US securities laws. Further, it may be difficult
to compel a non-US company and its affiliates to subject themselves
to a US court's judgment.
US
DS Smith Shareholders also should be aware that the Combination may
have tax consequences for US federal income tax purposes and under
applicable US state and local, as well as foreign and other, tax
laws, and, that such consequences, if any, are not described
herein. US DS Smith Shareholders are urged to consult with legal,
tax and financial advisers in connection with making a decision
regarding the Combination.
Forward Looking
Statements
This announcement contains certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, as amended, that are subject to risks and
uncertainties. All statements other than statements of historical
fact or relating to present facts or current conditions included in
this announcement are forward-looking statements, including any
statements regarding guidance and statements of a general economic
or industry-specific nature. Forward-looking statements give
International Paper's and DS Smith's current expectations and
projections with respect to the financial condition, results of
operations and business of International Paper, DS Smith and
certain plans and objectives of International Paper, DS Smith and
the Combined Company.
These forward-looking statements can be identified by the fact
that they do not relate only to historical or current
facts. These statements are based on assumptions and assessments made
by International Paper and DS Smith in light of their experience
and their perception of historical trends, current conditions,
future developments and other factors they believe appropriate, and
therefore are subject to risks and uncertainties which could cause
actual results to differ materially from those expressed or implied
by those forward-looking statements.
Forward-looking statements often use forward-looking or
conditional words such as "anticipate", "target", "expect",
"forecast", "estimate", "intend", "plan", "goal", "believe",
"hope", "aim", "will", "continue", "may", "can", "would", "could"
or "should" or other words of similar meaning or the negative
thereof. Forward-looking statements include statements relating to
the following: (i) the ability of International Paper and DS Smith
to consummate the Combination in a timely manner or at all;
(ii) the satisfaction (or waiver) of conditions to the
consummation of the Combination; (iii) adverse effects on the
market price of International Paper's or DS Smith's operating
results including because of a failure to complete the Combination;
(iv) the effect of the announcement or pendency of the
Combination on International Paper's or DS Smith's business
relationships, operating results and business generally;
(v) future capital expenditures, expenses, revenues, economic
performance, synergies, financial conditions, market growth,
dividend policy, losses and future prospects; (vi) business and
management strategies and the expansion and growth of the
operations of the International Paper Group or the DS Smith Group;
and (vii) the effects of government regulation on the business of
the International Paper Group or the DS Smith Group. There are many
factors which could cause actual results to differ materially from
those expressed or implied in forward looking statements. Among
such factors are changes in the global, political, economic,
business, competitive, market and regulatory forces, future
exchange and interest rates, changes in tax rates and future
business combinations or disposals.
These forward-looking statements are not guarantees of future
performance and are based on numerous assumptions regarding the
present and future business strategies of such persons and the
environment in which each will operate in the future. By their
nature, these forward-looking statements involve known and unknown
risks and uncertainties because they relate to events and depend on
circumstances that will occur in the future. The factors described
in the context of such forward-looking statements in this
announcement may cause the actual results, performance or
achievements of any such person, or industry results and
developments, to be materially different from any results,
performance or achievements expressed or implied by such
forward-looking statements. No assurance can be given that such
expectations will prove to have been correct and persons reading
this announcement are therefore cautioned not to place undue
reliance on these forward-looking statements which speak only as at
the date of this announcement. All subsequent oral or written
forward-looking statements attributable to International Paper or
DS Smith or any persons acting on their behalf are expressly
qualified in their entirety by the cautionary statement above.
Neither of International Paper nor
DS Smith undertakes any obligation to update publicly or revise
forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent legally
required.
International Paper's Annual Report on Form 10-K for the
fiscal year ended 31 December 2023 and Quarterly Report on Form
10-Q for the periods ended 31 March 2024 and 30 June 2024 filed
with the SEC contain additional information regarding
forward-looking statements and other risk factors with respect to
International Paper.
Additional
Information
This announcement may be deemed to be solicitation material in
respect of the Combination, including the issuance of the New
International Paper Shares in respect of the Combination. In
connection with the foregoing proposed issuance of the New
International Paper Shares, International Paper expects to file the
International Paper Proxy Statement. To the extent the Combination
is effected as a scheme of arrangement under English law, the
issuance of the New International Paper Shares in connection with
the Combination would not be expected to require registration under
the US Securities Act, pursuant to an exemption provided by Section
3(a)(10) under the US Securities Act. In the event that
International Paper determines to conduct the Combination pursuant
to an offer or otherwise in a manner that is not exempt from the
registration requirements of the US Securities Act, International
Paper expects to file a registration statement with the SEC
containing a prospectus with respect to the New International Paper
Shares that would be issued in the Combination. INVESTORS AND
STOCKHOLDERS ARE URGED TO READ THE INTERNATIONAL PAPER PROXY
STATEMENT, THE SCHEME DOCUMENT, AND OTHER RELEVANT DOCUMENTS FILED
OR TO BE FILED WITH THE SEC OR INCORPORATED BY REFERENCE IN THE
INTERNATIONAL PAPER PROXY STATEMENT (IF ANY) CAREFULLY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT INTERNATIONAL PAPER, THE COMBINATION AND RELATED MATTERS.
Investors and stockholders will be able to obtain free copies of
the International Paper Proxy Statement, the Scheme Document, and
other documents filed by International Paper with the SEC at the
SEC's website at http://www.sec.gov. In addition, investors
and stockholders will be able to obtain free copies of the
International Paper Proxy Statement, the Scheme Document, and other
documents filed by International Paper with the SEC at
https://www.internationalpaper.com/investors.
Participants in the
Solicitation
International Paper and its directors, officers and employees,
including Mark S. Sutton, Chairman of the International Paper Board
of Directors, Andrew K. Silvernail (also Chief Executive Officer of
the Company), Jamie A. Beggs, Christopher M. Connor, Ahmet C.
Dorduncu, Anders Gustafsson, Jacqueline C. Hinman, Clinton A.
Lewis, Jr., Kathryn D. Sullivan, Scott A. Tozier, and Anton V.
Vincent, all of whom are members of the International Paper Board ,
as well as Timothy S. Nicholls, Senior Vice President and Chief
Financial Officer, may be deemed participants in the solicitation
of proxies from International Paper's stockholders in respect of
the Combination, including the proposed issuance of New
International Paper Shares. Information regarding International
Paper's directors and executive officers is contained in: (i) the
"Directors, Executive Officers and Corporate Governance,"
"Executive Compensation" and "Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters"
sections of the Annual Report on Form 10-K for the fiscal year
ended 31 December 2023 of International Paper, which was filed with
the SEC on 16 February 2024; (ii) the "Item 1 - Election of 9
Directors," "Compensation Discussion & Analysis (CD&A),"
and "Security Ownership of Management" sections in the definitive
proxy statement on Schedule 14A for the 2024 annual meeting of
stockholders of International Paper, which was filed with the SEC
on 2 April 2024; and (iii) International Paper's Current
Reports on Form 8-K filed with the SEC on 19 March 2024 and 23 May
2024. Additional information regarding the identity of potential
participants, and their direct or indirect interests, by security
holdings or otherwise, will be set forth in the International Paper
Proxy Statement relating to the Combination when it is filed with
the SEC. These documents may be obtained free of charge from the
SEC's website at www.sec.gov and International Paper's website at
https://www.internationalpaper.com/investors.
Publication on
website
A
copy of this announcement and the documents required to be
published pursuant to Rule 26.1 and Rule 26.2 of the Code will be
made available (subject to certain restrictions relating to persons
resident in Restricted Jurisdictions), free of charge, at
www.internationalpaper.com by no later than 12 noon on the Business
Day following the date of this announcement.
Neither the contents of this website nor the content of any
other website accessible from hyperlinks on such websites is
incorporated into, or forms part of, this
announcement.
Disclosure requirements of
the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1 per cent. or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the Offer Period and, if later, following the announcement in
which any securities exchange offeror is first
identified.
An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 p.m. (London time) on the 10th Business Day (as
defined in the Code) following the commencement of the Offer Period
and, if appropriate, by no later than 3.30 p.m. (London time) on
the 10th Business Day (as defined in the Code) following
the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange offeror
must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities exchange
offeror. A Dealing Disclosure must contain details
of the dealing concerned and of the person's interests and short
positions in, and rights to subscribe for, any relevant securities
of each of (i) the offeree company and (ii)
any securities exchange offeror(s), save to
the extent that these details have previously been disclosed under
Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b)
applies must be made by no later than 3.30 p.m. (London time) on
the Business Day (as defined in the Code) following the date of the
relevant dealing.
If
two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant
securities in issue, when the Offer Period commenced and when any
offeror was first identified. If you are in any doubt as to whether
you are required to make an Opening Position Disclosure or a
Dealing Disclosure, you should contact the Panel's Market
Surveillance Unit on +44(0)20 7638 0129.