4th Jun 2018 09:10
LONDON (Alliance News) - FTSE 100-listed packaging firm DS Smith Group PLC said Monday it is set to acquire Spanish-listed packaging business Papeles y Cartones de Europa SA, funding the acquisition through a rights issue.
The acquisition prices the Spanish company, also known as Europac, at EUR16.80 per share, valuing it at a total of EUR1.67 billion.
For 2017, Europac reported revenue of EUR868 million and earnings before interest, tax, deprecation and amortisation of EUR158 million.
To fund the acquisition, DS Smith plans to raise GBP1.0 billion through a rights issue to be launched this month, and a new debt facility of EUR740 million. The rights issue is fully underwritten by Citigroup, Goldman Sachs and JP Morgan and has not yet been priced.
DS Smith said the pricing will be released with the publication of a prospectus when the standby agreement will be replaced by a definitive underwriting agreement.
"DS Smith believes that the acquisition represents an exceptional scale opportunity to build its position in a key packaging growth region," the company said.
"Specifically, DS Smith plans to build upon Europac's high quality, well-invested operational asset base and distribution network on the Iberian Peninsula and in France to support Europac's existing customers and DS Smith's multi-national customers, many of whom have operations in these regions."
The acquisition is expected to be completed in the fourth quarter of 2018. On completion, DS Smith plans to delist Europac stock from Madrid and Barcelona.
The company said it believes that the acquisition will deliver approximately EUR50 million in recurring pre-tax cost synergies by 2021.
DS Smith also said it delivered a "strong" performance for the year to April 30, with continuing box volume growth. The company is set to release its financial year results this month.
Since the start of the new financial year, the company said group performance has been "in line with expectations".
DS Smith shares were trading up 3.3% at 581.00 pence.
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