SCA Divests Its Packaging Operations to DS Smith for EUR 1.7 Billion

Jan. 17, 2012 (Press Release) - SCA’s packaging operations — excluding the two kraftliner mills in Sweden — are divested to DS Smith. The purchase price amounts to EUR 1.7bn on a debt free basis.

“The reason for the divestment is primarily to enable increased growth in the hygiene business,” said Jan Johansson, President and CEO of SCA.

The packaging operations, excluding the two kraftliner mills, had net sales in 2010 of approximately SEK 24.2bn (EUR 2.5bn) and an operating profit, excluding restructuring costs, of approximately SEK 1.1bn (EUR 117million). The operations have approximately 12,000 employees.

The purchase price is equivalent to an EBITDA multiple of 6.3 based on the 12 month period Q4 2010 – Q3 2011.

In connection with the transaction a write-down of goodwill of approximately SEK 4bn will be made, which will have the result that the remaining kraftliner operations will not have any goodwill. The write-down will impact the result for the fourth quarter of 2011 and will be treated as an item affecting comparability.

The debt/equity ratio will decrease to approximately 0.5 provided that the divestment of the packaging operations and the previously announced binding offer for Georgia-Pacific´s European tissue operations are completed according to plan.

Earnings per share will decrease by SEK 0.75 based on net profit for the 12 month period Q4 2010 – Q3 2011.

Regarding the French part of the packaging operations, the price for which is included in the announced purchase price, DS Smith has made a formal offer to acquire this business. This process is subject to consultation with relevant works councils and will be treated separately.

SCA’s two kraftliner mills in Sweden are not included in the transaction as they are well integrated with SCA´s forest products operations.

“Over the years we have developed our packaging business and we are divesting a competitive operation to an industrial buyer who can continue to develop it," Johansson said.

The transaction is subject to approval from DS Smith´s shareholders and antitrust clearance from the European Commission.

Closing is expected during the second quarter of 2012.

DS Smith will publish a prospectus regarding the transaction. DS Smith´s financing of the transaction is committed.

SOURCE: SCA