LONDON (From news reports) -- British packaging group Mondi will not make an offer to buy DS Smith, it said on Friday, bowing out of the battle after its UK peer agreed to a 5.8 billion pound ($7.21 billion) deal with International Paper earlier this week.

Mondi shares jumped 8% and DS Smith dropped 11% by 1146 GMT on the London FTSE 100 index. Mondi said a transaction "would not be in the best interests of its shareholders".

DS Smith shares had rallied more than 45% since Mondi first made its interest in buying the group known in early February and then reached an agreement in principle in March for an all-stock deal valued at 5.14 billion pounds.

International Paper late last month made a higher counter-bid as it sought to expand its European presence and cement its position as the world's top paper company by revenue at a time of consolidation in the sector.

The U.S.-based company said it would seek a secondary listing of the combined group's shares in London as part of the deal, joining the likes of Mondi and Smurfit Kappa.

Late last year Ireland's Smurfit Kappa agreed to purchase U.S. rival WestRock in an $11 billion deal, which is expected to close in July.

International Paper's deal with DS Smith, which counts northern and southern Europe as its largest markets, is expected to close in the fourth quarter of this year, subject to shareholder and regulatory approval.