(Bloomberg) -- Mondi Plc walked away from a possible bidding battle for UK packaging rival DS Smith Plc, a move that secures a deal for US bidder International Paper Co.

Mondi said that after conducting a due-diligence review, it decided a transaction “would not be in the best interests of its shareholders.”

Earlier this week, International Paper agreed to buy and DS Smith in a £5.8 billion ($7.2 billion) all-stock deal, but investors were waiting to see whether Mondi would come back with an offer. Mondi had announced a deal in principle in March before this week’s agreement with International Paper.

DS Smith shares fell 12% in London following the announcement, while Mondi rose by more than 10%.

It’s the latest deal in the paper and packaging sector after Smurfit Kappa Group Plc agreed last year to acquire WestRock Co. to create an Irish-American powerhouse. 

The industry benefited from a surge in demand for deliveries during the pandemic as consumers under lockdown ordered more goods online. It has since weathered a slowdown as e-commerce returned to more normal levels.

Buying DS Smith will strengthen International Paper’s position in the US and Europe, outgoing Chief Executive Officer Mark Sutton said on a call with analysts and investors on Tuesday. Chief Financial Officer Tim Nicholls said the company doesn’t anticipate “major regulatory issues” and that any hurdles “would be minimal, if anything.”

The US company has said it would make DS Smith’s London headquarters its European base and seek a secondary listing in the UK capital.

DS Smith traces its roots back to a box-making business started by the Smith family in East London in 1940 and listed on the London Stock Exchange in the late 1950s. The company is one of the world’s largest cardboard box makers and produces packaging for everything from cereal boxes to Amazon parcels.

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