Packaging group DS Smith wraps up £1.3bn deal

DS SMITH, the worldwide plastics business with a large packaging operation in Rugby, has completed the acquisition of one of its major rivals in a £1.3bn deal.

The firm has acquired SCA Packaging, a global plastics packaging group headquartered in Belgium. SCA employs 13,500 people at 172 sites in 25 countries.

SCA is the second largest packaging business in Europe and DS Smith said the acquisition represents a significant opportunity for it to become the leading supplier of recycled packaging for consumer goods in Europe.

It gives the firm access to new markets across continental Europe and will develop broader relationships with existing customers as well as potential new ones. It is also expected to deliver pre-tax cost synergies of around £60m (€75m) and cumulative capital expenditure and working capital benefits of at least £32m (€40m) by the end of the third full financial year following completion.
 
Since the announcement of the acquisition in January DS Smith has put in place detailed integration plans which it is now implementing.  
 
Miles Roberts, Group Chief Executive, DS Smith, said: “We are delighted to have completed this acquisition, which is a key step in our strategic plan to become the leading supplier of recycled packaging across Europe.
 
“The SCA Packaging business is very complementary to DS Smith’s strengths and creates a significantly enlarged geographic footprint. Together, we are now better positioned to meet the needs of our pan-European customers, deliver higher standards of customer service and drive forward product innovation.  

“We can now start to integrate, develop and grow these two excellent businesses as we look to deliver substantial value for our customers, shareholders and employees.”
 
The acquisition has been financed from existing and additional debt and a fully underwritten rights issue which will raise approximately £466m.