International Paper IP has announced an agreement to sell five corrugated box plants in Europe to Germany-based PALM Group. The transaction, subject to approval from the European Commission, is expected to close by the end of the second quarter of 2025. Once completed, the sale will fulfill all of IP’s commitments to the European Commission related to its acquisition of DS Smith Plc.

The assets included in the sale include three plants in Normandy, France, one box plant in Ovar, Portugal, and another box plant in Bilbao, Spain.

On Jan. 24, 2025, International Paper announced that the European Commission granted Phase I clearance for its combination with DS Smith, conditional upon the divestment of the aforementioned facilities.

IP-DS Smith Merger Creates a Leader in Sustainable Packaging

International Paper and DS Smith, two of the leading producers of sustainable packaging, containerboard and pulp products, combined forces on Jan. 31, 2025, to create a new global leader in sustainable packaging solutions. IP is now more focused on the attractive North American and EMEA regions. With a stronger portfolio of sustainable packaging solutions, the combination of International Paper and DS Smith enhances its offerings' geographic presence and offers a higher scope of innovation. 

International Paper had earlier expected $514 million of pre-tax cash synergies from the acquisition by 2027, which has now been updated to $600-$700 million. This increase factors in gains from applying the 80/20 strategic approach in EMEA, mill and box plant optimization and an increased reduction in overhead costs.

International Paper recently updated its revenue target to around $27 billion in 2025, incorporating the contribution from the DS Smith acquisition. This projects a 45% increase from revenues of $18.6 billion in 2024.  The company forecasts adjusted total EBITDA to be in the band of $3.5-$4.0 billion for 2025. IP had reported adjusted EBITDA of $1.99 billion in 2024.  

For 2027, the company projects net sales at $26-$28 billion. The midpoint of the guidance represents a compound annual growth rate (CAGR) of 13.2% from $18.6 billion reported in 2024. 

Adjusted EBITDA is envisioned at $5.5-$6 billion in 2027. The midpoint suggests a 42.5% CAGR over the 2024-2027 period.  This growth is expected to be driven by above-market volume growth, lower costs stemming from footprint rationalization, operations optimization and overhead reduction, as well as synergies from the DS Smith acquisition.

The free cash flow guidance of $2-$2.5 billion for 2027 suggests a CAGR of 43.8% compared with 2024. IP has earmarked capital spending of around $1.9 billion per year from 2025 to 2027.

Recently, there has been a surge in merger and acquisition activities within the industry, as companies position themselves to seize growth opportunities and enhance their packaging and sustainability offerings, among other strategic objectives. Smurfit Westrock Plc SW was formed by merging two major paper and packaging industry players — Smurfit Kappa and WestRock — on July 5, 2024. 

Smurfit Westrock operates in 40 countries, with more than 500 packaging converting operations and 62 paper mills. The company reported net sales of $7.54 billion, aided by the positive impacts of acquisitions and growth in corrugated volumes.

IP Stocks’ Price Performance

International Paper’s shares have risen 27.4% in the past year compared with the industry’s 13.7% growth.

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International Paper’s Zacks Rank and Stocks to Consider

International Paper currently carries a Zacks Rank #3 (Hold). 

Some better-ranked stocks from the basic materials space are SSR Mining Inc. SSRM and Carpenter Technology Corporation CRS. While SSR Mining currently sports a Zacks Rank #1 (Strong Buy) while Carpenter Technology carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an average trailing four-quarter earnings surprise of 155.7%. The Zacks Consensus Estimate for SSRM’s 2025 earnings is pegged at $1.21 per share, implying year-over-year growth of 332%. SSR Mining stock has soared 105% in the last year.

Carpenter Technology has an average trailing four-quarter earnings surprise of 15.7%. The Zacks Consensus Estimate for CRS’ 2025 earnings is pegged at $6.95 per share, which indicates year-over-year growth of 46.6%. Carpenter Technology shares gained 125% in the last year.

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International Paper Company (IP) : Free Stock Analysis Report

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