UPDATE 1-Mondi drops out of race to buy DS Smith in win for rival International Paper

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April 19 (Reuters) - British paper and packaging group Mondi said on Friday it would not make an offer to buy DS Smith, bowing out of the battle after its UK peer agreed to a 5.8 billion pound deal with International Paper earlier this week.

Mondi said it had decided a transaction "would not be in the best interests of its shareholders".

The company first made its interest known in early February and had reached a deal in principle in March to buy DS Smith in an all-stock deal valued at 5.14 billion pounds.

International Paper late last month had made a higher counter-bid as it sought to expand its European presence at a time of consolidation in the sector. (Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich and Krishna Chandra Eluri)