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DS Smith (BBB-): Market Reaction

BASIC INDUSTRIES

• Equity has jumped to 20p on a potential 42p uplift from an International Paper bid vs Mondi. The news increases the chances of an improved bid from Mondi.

• With no firm offer from IP, the market isn’t pricing in that offer scenario as the most likely outcome yet. Either IP could walk away, bid lower, or MNDILN could improve their bid.

• SMDSLN spreads are around 5bp wider so far. Credit is also pricing the risk of IP winning at well under 50%.

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