DS Smith shares surged after the company confirmed it had received an initial approach from British rival Mondi Plc about a potential deal to create one of the world’s largest makers of packaging supplies.

While no firm takeover proposal has been received, “the board of DS Smith understands that Mondi is considering a possible offer,” the company said in a statement Thursday.

Shares in DS Smith surged as much as 17%, the most since 2009, valuing the company at £4.3-billion ($5.4-billion). Mondi shares slipped 2.9%, valuing it at £5.9-billion.

A deal would create one of the Europe’s largest containerboard and box producers, worth more than £10-billion based on current market values.

Under UK takeover rules, Mondi now has until March 7 to “put up or shut up” — in other words, make a firm offer or walk away — unless the deadline is extended with the consent of both parties.

DS Smith traces its roots back to a box-making business started by the Smith family in East London in 1940. It 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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Mondi began life in South Africa as part of Anglo American, when the mining company built a mill there.

It’s not the first time the two companies have been linked with a deal. In 2021, Mondi explored a takeover of DS Smith, Bloomberg reported, although talks with its advisers did not lead to a deal at the time.

During the pandemic, companies like DS Smith, Mondi and Smurfit Kappa Group Plc were boosted by the surge in online shopping as people were stuck at home. They then had to weather a slowdown as e-commerce returned to more normal levels.

There has already been consolidation in the sector. Smurfit announced plans to shift its primary listing from London to the US after completing a €20-billion merger with WestRock, a smaller rival.

DS Smith Chief Executive Officer Miles Roberts plans to retire and will step down no later than Nov. 30, 2025, the company said in December. Roberts has been credited with transforming the former paper mill business during his time in charge and helping it identify and take advantage of key global trends in packaging.