(Reuters) - Shares in DS Smith rose more than 7% on Friday, a day after bigger rival Mondi (LON:MNDI) made a 5.14 billion pound ($6.58 billion) all-share offer to buy the British paper and packaging group.
The deal, which will create a packaging giant worth more than 11 billion pounds, valued DS Smith at about 373 pence per share, a 33% premium to its closing price before Mondi made its interest public last month.
"Anticipating limited regulatory hurdles or third-party interloper risks, we believe the proposed merger benefits both Mondi and DS Smith shareholders," Davy Research analyst Justin Jordan wrote in a note.
Shares in DS Smith, whose customers include e-commerce giant Amazon (NASDAQ:AMZN) among others, have rallied since Mondi's approach first came to light in early February. The stock hit a more than one-year high of 350 pence in early trade.
Mondi shares, however, fell 2.5%.
While the key financial terms have been agreed upon in principle, the combination is still conditional on other terms and conditions.
($1 = 0.7812 pounds)