PaperAge Magazine

DS Smith Proposes to Buy Europac for EUR 1.9 Billion

rolls of kraftliner Europac is a leading Western European integrated manufacturer of corrugated packaging and paper with operations in Spain, France and Portugal.

June 4, 2018 - UK-based corrugated packaging producer DS Smith today announced a proposal to acquire Papeles y Cartones de Europa, S.A., known as Europac, for EUR 1.9 billion (£1.45 billion) including debt. Europac is a leading Western European integrated manufacturer of corrugated packaging and paper with operations in Spain, France and Portugal.

DS Smith's proposed offer price per Europac share is EUR 16.80.

In commenting on the timing of the acquisition, DS Smith's Chief Executive, Miles Roberts, explained, “So why now? When a number of years ago DS Smith entered the Iberia market with a number of acquisitions such as Lantero (Spain) and Gopaca (Portugal) we know the Europac business very well — we're a customer and supplier to each other. We know the management very well and we've been talking for a number of years. But we both feel that now is the right time to seek to join our businesses.”

Roberts said the expected financial returns from the deal are attractive. “We believe we can create cost synergies of 50 million Euros per annum, and these cost synergies are based on procurement, lower distribution costs and a harmonizing the supply chain of Europac into DS Smith.

“In the first full year of ownership, this transaction is expected to be earnings enhancing and deliver return on capital that's ahead of the group's weighted average cost of capital,” Roberts added.

The deal is subject to approval by shareholders of DS Smith, along with regulatroy approval from the European Commission, Roberts said.

Strategic Review of Plastics Business

Roberts also noted that DS Smith intends to conduct a strategic review of its plastics business, which is a manufacturer of flexible packaging, filling equipment, dispensing solutions, and rigid packaging returnables in Europe. The division operates out of sites in Europe, North America, Asia and Australasia.

DS Smith is a leading provider of corrugated packaging in Europe and present in 37 countries, employing around 26,000 people. To learn more, please visit: www.dssmith.com.

SOURCE: DS Smith