Tweet

Ds Smith Plc Proposes SCA Acquisition

18 January 2012

DS Smith Plc has announced the proposed acquisition of the packaging division of Svenska Cellulosa Aktiebolaget (SCA) excluding the kraftliner assets for a net consideration of approximately £1.3bn, in a strategic move to "access new geographical markets across continental Europe"

The gross price will be €1.7bn on a cash, debt and, to the extent legally possible and commercially practicable, pension free basis and approximately €1.6bn on a net basis after taking into account a pension price adjustment.

DS Smith proposes to finance the acquisition with existing and additional debt and a fully underwritten Rights Issue of nine New Ordinary Shares for every 8 Existing Ordinary Shares at 95 pence each to raise a total of approximately £466m.

SCA Packaging is the second largest packaging business in Europe and the aqquisition represents a significant opportunity for DS Smith to achieve its stated strategic aim of becoming the leading supplier of recycled packaging for consumer goods in Europe.

The Board of DS Smith believes that the Acquisition, if completed, will add value for DS Smith Shareholders by:

• • providing access to new geographical markets across continental Europe that better matches the location and scale of key pan-European FMCG customers, given the complementary geographic business and customer fit between the two businesses;
• • developing broader relationships with existing customers as well as the potential to win new customers through increased ability to supply and innovate new products and improve service levels;
• • driving further benefits from the Enlarged Group's operational structure, utilising the strengthened resource in key commercial and operational functions of DS Smith's business;
• • delivering estimated annualised pre-tax cost synergies from procurement and operational efficiencies of at least €75 million per annum and cumulative capital expenditure and working capital benefits of at least €40 million by the end of the third full financial year following Completion;
• • offering an expected return on capital above DS Smith's weighted average cost of capital for the first full financial year of ownership with further improvement in the second and third full financial years;

• substantially enhancing DS Smith's EPS2

www.dssmithrecycling.com

Darrel Moore