International Paper weighs selling its EMEA box arm after an $80 million Q2 operating loss. The London spin-off continues

How International Paper came to own DS Smith

IP completed its purchase of the UK box maker DS Smith on 31 January 2025, issuing 0.1285 new IP shares for each DS Smith share, its completion release said⁸. IP’s first-quarter 2025 Form 10-Q valued the consideration at about $9.9 billion, using IP’s closing price of $55.63 on the completion date, and recorded provisional goodwill of $4,048 million. IP also took a secondary listing in London under the symbol IPC.

The European business became IP’s Packaging Solutions EMEA segment. In its first eleven months under IP, to 31 December 2025, it booked $8,451 million of net sales and a $236 million operating loss, IP’s fourth-quarter 2025 release shows. The same release recorded a $2,467 million pre-tax, non-cash goodwill impairment for the EMEA reporting unit as of 31 December 2025⁵.

On 29 January 2026, alongside those results, IP said it would split into two public companies, spinning off the EMEA business to shareholders while keeping a meaningful stake. It expected completion in 12 to 15 months and named the president of DS Smith as the expected chief executive of the new company, which operates in 30 countries⁷. The same release named a former DS Smith senior independent director, who joined IP’s board in 2025, as expected chair, and said the capital structure and wider leadership team would be announced later. Whether the spin-off is tax-free for US federal income tax purposes depends on final terms and on the shares IP keeps, it said.

What changed on 14 and 15 October

24 September: a results date set. IP said it would release third-quarter 2026 earnings on 28 October 2026, before the New York Stock Exchange opens, with a webcast at 10 a.m. Eastern time³. That release will be the first EMEA segment update since the sale talks became public.

14 October: the listing route confirmed. IP’s release on the Capital Markets Day said the EMEA business is expected to be separated by a spin-off, through a London Stock Exchange listing, with a Level II American depositary receipt (ADR) programme listed on the NYSE. A Level II ADR lets US investors trade the shares on a US exchange without a full US primary listing. The new company is to be called DS Smith plc².

The same release set the conditions: final approval by IP’s board, an effective registration statement with the US Securities and Exchange Commission, and a prospectus approved by the UK Financial Conduct Authority. It set a Capital Markets Day in London on 3 November 2026, from 13:00 to 17:00 GMT, to be hosted by the future chief executive and future chief financial officer of DS Smith plc. IP gave no new completion date and said no assurance can be given on timing or structure. The agenda covers the planned company’s business model, growth strategy and post-separation financial outlook, with a webcast and a recording to be posted on DS Smith’s website afterwards.

15 October: sale talks confirmed. A day later, IP issued its statement regarding a possible sale, citing recent movement in its share price and press speculation. It said it is evaluating unsolicited inbound inquiries for the EMEA Packaging Business and is in discussions with potential bidders. It called the process early stage, said there is no certainty that a sale will be agreed or completed, and confirmed the Capital Markets Day still stands¹.

“The Company is progressing the spin off and evaluating the potential sale in parallel.” International Paper, statement on a possible EMEA Packaging Business sale, 15 October 2026

15 October: what the press reported. The Financial Times reported that the private equity firms Lone Star and Atlas Holdings are considering bids that could value the business at less than $6 billion, according to Finimize’s summary of the FT report. GuruFocus reported on 15 October that IP shares rose 6.3%, and that other bidders had withdrawn. These are press reports. IP’s statement names no bidder and gives no price, and SPI has not yet confirmed the bidders, the valuation or the share move in an IP or exchange document.

What IP's EMEA numbers show

IP reports the EMEA business as one segment and gives net sales and operating profit, not segment adjusted EBITDA, in its quarterly releases; SPI has not yet confirmed an IP figure for EMEA adjusted EBITDA. In the second quarter of 2026 the segment’s net sales of $2,287 million were 38.1% of IP’s $6,004 million group total, by SPI’s calculation, and its $80 million operating loss compared with a $204 million profit in Packaging Solutions North America⁴.

IP’s second-quarter release explained the slide from the first quarter. Higher paper prices were more than offset by lower sales volumes in what it called a continued soft market, driven by geopolitical uncertainty and consumer sentiment. Packaging margins were squeezed because higher paper prices had not yet passed into box prices, while lower energy costs and cost-out actions only partly helped.

Separation is already costing money. IP booked $43 million of pre-tax EMEA separation costs in the second quarter and $11 million in the first, $54 million in the half, as special items. In the third and fourth quarters of 2025 the segment carried $56 million and $73 million of accelerated depreciation for mill and plant closures, IP’s releases show^5,6.

SPI calculation (four quarters to June 2026): EMEA net sales of $2,310 million, $2,300 million, $2,323 million and $2,287 million sum to $9,220 million, and operating losses of $58 million, $223 million, $51 million and $80 million sum to $412 million. That is an operating margin of minus 4.5%, including $129 million of accelerated closure depreciation.

The goodwill charge sits beside the deal value. IP recorded $4,048 million of provisional goodwill on DS Smith in the first quarter of 2025, then a $2,467 million impairment for the EMEA reporting unit eleven months later^5,9. IP’s 2025 annual report put spin-off completion near the end of 2026 or early 2027.

Who gains and who is exposed

International Paper. IP keeps the choice of route. A spin-off hands EMEA shares to IP shareholders while IP keeps a stake, under the January plan; a sale would turn the unit into cash, on terms IP has not disclosed. Its second-quarter release shows the North American segment earned $204 million at operating level while EMEA lost $80 million⁴. At group level IP reported adjusted EBITDA from continuing operations of $587 million on net sales of $6,004 million, and a $12 million net loss.

Box buyers in Europe. Brand owners and retailers buying corrugated boxes from the former DS Smith network face a new owner in either case. IP’s release of 14 October says the business will present its growth strategy and post-separation financial outlook on 3 November, which is the first public view of how the business plans to price and invest after IP².

Rival box makers. Smurfit Westrock reported Europe, MEA and APAC segment net sales of $2,826 million and adjusted EBITDA of $380 million for the second quarter, both slightly up on a year earlier. Mondi’s Corrugated Packaging revenue rose 4.4% to EUR 1,977 million in the first half, helped by acquired Schumacher plants, though underlying EBITDA fell to EUR 148 million¹³.

Stora Enso. Stora Enso’s Integrated Packaging segment, which combines containerboard and packaging solutions from 1 January 2026, reported sales of EUR 599 million and adjusted EBIT of EUR 29 million in the second quarter. It sold its corrugated board production units in Germany in July 2026 to optimise its asset base¹⁴.

Recovered fibre and energy suppliers. IP’s second-quarter release named higher recovered fibre costs as a drag on EMEA, partly offset by lower energy costs including subsidies. Suppliers on long-term contracts with the EMEA mills will want clarity on which entity they contract with after separation.

IP shareholders. The listing route gives IP shareholders London-listed DS Smith plc shares, or ADRs in New York. A sale, if one is agreed, would replace that with whatever proceeds IP negotiates. IP has said neither outcome is certain.

The pinch point: pricing a loss-making box network in a soft market

The sale talks turn on a number IP does not yet publish: what the EMEA business earns before depreciation and separation costs. IP’s releases give segment operating profit, which has been negative for four quarters in a row, and the Capital Markets Day on 3 November is billed as setting out the post-separation financial outlook². Until then, any buyer and any future DS Smith plc shareholder is working from partial figures.

The market backdrop is mixed. Mondi said containerboard selling prices in the first half were on average lower than a year earlier, and that it expects the full benefit of its price increases in the third quarter. Stora Enso reported its own corrugated packaging deliveries at 315 million square metres in the second quarter, down 2.6% on 323 million a year earlier¹⁴. IP itself said box prices lagged paper prices in its European business.

Cepi’s figures point the same way. It reported that European paper and board output fell 2.4% in the first quarter of 2026 against a year earlier, and that imports reached a record 7.7% of EU consumption in 2025¹⁵. For anyone valuing mills, that is capacity in a market where output is drifting lower.

How EU packaging rules bear on the box business

Regulation (EU) 2025/40, the Packaging and Packaging Waste Regulation (PPWR) tracked as PR-EU-001, has applied since 12 August 2026. Its minimisation duty, a 50% maximum empty space ratio for certain packaging and the Annex V format restrictions start around 1 January 2030, according to the Commission’s guidance notice of 10 June 2026¹⁶. For a box maker, the empty space rule means e-commerce cases are sized more tightly to the product.

The reuse targets, tracked as PR-EU-006, sit in Article 29. From 1 January 2030, an operator using transport packaging, or sales packaging used to transport products, must ensure at least 40% is reusable within a re-use system, and should endeavour to reach 70% from 2040, the guidance says. Recital 95 sets a stricter rule for some flows, such as pallets, crates and drums moved between an operator’s own sites or within one Member State, with cardboard boxes exempt from that stricter rule. Calculation rules for the reuse targets are due by 30 June 2027.

How the EMEA business compares with Smurfit Westrock, Mondi and Stora Enso

European box makers report on different bases, in different currencies and over different periods, so the figures below sit side by side and are not compared directly. Smurfit Westrock reports its Europe, MEA and APAC segment in US dollars with adjusted EBITDA. In the second quarter of 2026 the segment had aggregate net sales of $2,826 million against $2,778 million a year earlier, and adjusted EBITDA of $380 million against $372 million, a 13.4% margin in both periods¹¹. At group level Smurfit Westrock reported second-quarter net sales of $8,031 million and adjusted EBITDA of $1,140 million, a 14.2% margin, and said it was closing eight converting facilities in Europe and North America.

Mondi reports in euros and by half-year. Its Corrugated Packaging segment’s revenue was EUR 1,977 million in the first half of 2026, against EUR 1,893 million, while underlying EBITDA fell to EUR 148 million from EUR 284 million, a margin of 7.5% against 15.0%. Mondi said containerboard sales volumes rose 12%, mainly from its Duino and Kuopio machines, and box volumes rose 2% like for like¹³.

Stora Enso reports in euros and by quarter, with adjusted EBIT. Its Integrated Packaging segment had sales of EUR 599 million in the second quarter, down 4.2%, and adjusted EBIT of EUR 29 million, a 4.9% margin. Group sales were EUR 2,423 million¹⁴.