Market report

DS Smith on verge of £10bn deal, SSE shares fall

DS Smith has received an approach (pic: DS Smith)

M&A is suddenly back on the agenda. After Barratt and Redrow unveiled a £2.5bn merger, the biggest riser on Thursday was packaging manufacturer DS Smith which received a takeover approach from Mondi, a rival UK paper specialist, in a deal that would create a European packaging giant with a value of more than £10 billion.

The DS Smith board told investors there was “no certainty” a deal would be signed, while Mondi said the combined operations would be more resilient and could benefit from “economies of scale and efficiencies across a combined supply chain”.

DS Smith’s shares closed up 28p, or 9.9%, to 308.5p, while Mondi’s fell 45p, or 3.% to 1336p.

The biggest faller was AstraZeneca, down 6.36% after the drugmaker reported weaker-than-expected earnings, sending its shares to their lowest level in over a year.

Energy company SSE‘s warning that its Dogger Bank development may be delayed because of recent stormy weather, together with a weak trading update, sent the shares down 77.5p, or 4.69% to 1578.5p.

The Competition and Markets Authority launched a merger inquiry into Aviva’s takeover of AIG Life, which sells critical illness cover and life insurance in the UK.

Last September, Aviva announced it was paying £460m for the AIG business from its American owner Corebridge Financial. The British insurance giant said the deal would help it reach small and medium sized companies and individuals with high incomes.

The CMA said on Thursday that it wanted to discover whether the takeover “may be expected to result in a substantial lessening of competition”.

The FTSE 100 closed down 33.27 points or 0.44% at 7,595.48.

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