The FTSE 100 UK packaging firm DS Smith is to be taken over by a bigger US rival, International Paper, after the companies agreed a £5.8bn all-share deal.

Tennessee-based International Paper, one of the largest paper and pulp companies in the world, moved in late March to gatecrash a £5.14bn all-share deal put forward by its British rival Mondi, based in Weybridge, that month.

International Paper said it would seek a secondary listing on the London stock market, and set up a European headquarters at DS Smith’s base in London.

The companies recommended the deal to both sets of shareholders, arguing that they will bring together complementary businesses with “industry-leading positions in two of the most attractive geographies of Europe and North America”.

The companies believe the deal will create a global leader in sustainable packaging and create the opportunity for savings by optimising the mill network, supply chains and freight costs. They expect to reap cost savings of at least £413m a year by the end of the fourth year after the takeover.

This includes cutting 400 head office and senior management jobs, equating to 0.6% of the combined workforce. DS Smith employs 30,000 people worldwide, including 4,750 in the UK, while International Paper employs 39,000.

Under the terms of the takeover, which needs the approval of both sets of shareholders, DS Smith investors will receive 0.1285 International Paper shares for each DS Smith share. This values each DS Smith share at 415p based on the closing International share price of $40.85 on 25 March, the last day before the announcement of a possible offer.

Once the deal is completed, International Paper shareholders will own about 66% of the combined company and DS Smith investors will hold the rest.

The DS Smith chief executive, Miles Roberts, is to act as a consultant to the combined company and Richard Pike, the UK company’s financial director, will be paid a retention award of £550,000 to stay on at the new business.

DS Smith was founded in east London in the 1940s by two cousins, David G and David S Smith, as a box-making business, and was named after their grandfather, a Polish immigrant who had set up the original business.

The company listed on the London Stock Exchange in the late 1950s and has grown through a series of acquisitions, carving out a strong position in packaging and paper products. It operates in 30 different countries.

The proposed deal is the latest in a flurry of takeover bids for UK firms in recent weeks.

Private equity and some industry firms have been snapping up British assets considered cheap, as sterling remains weak after Brexit, the Covid pandemic and the Liz Truss government’s disastrous mini-budget in the autumn of 2022.