UK’s DS Smith in €1.67Bn buyout bid

UK packaging giant DS Smith has offered to buy Spanish rival Europac for €1.67Bn.

The company that makes corrugated cardboard packaging and boxes wants a 58.97% share in its Spanish competitor which has nine new factories located in Portugal.

DS Smith is one of Europe’s leading companies in the manufacture of custom-made packaging and is specialised in designing advanced packaging and offering a local service close to the factories and premises of its clients.

In Portugal it has a point-of-sale display manufacturing factory in Gondesende-Esmoriz. The new of the takeover sent shares soaring by 3% on the FTSE 100 on Monday.

The offer price of €16.80 per Europac share values the entire share capital of Europac at €1,667 million (£1,453 million), with an implied enterprise value of €1,904 million (£1,659 million).

Europac is a leading, Spanish-listed, approximately 42%. Family-owned, highly-complementary, vertically-integrated packaging business. Europac has a diversified customer portfolio with strong customer relationships and FMCG orientation.

The Acquisition, DS Smith’s transaction expenses and the refinancing of Europac debt will be financed from a rights issue to raise approximately £1,000 million (c.€1,171 million) net of expenses (the “Rights Issue”), which has been fully underwritten on a standby basis, and a new committed debt facility of £650 million (c.€746 million).

The Acquisition is conditional on the receipt of acceptances from Europac shareholders representing at least 50 per cent. plus 1 share of the entire share capital of Europac, receipt of regulatory approvals and the approval of DS Smith shareholders.

Europac currently has 27 factories in Europe, the many of which are in Portugal where it has nine new factories employing 2,300 jobs at its factories which have a €1.1Bn annual turnover.

DS Smith, which is headquartered in Euston, London, is listed on the FTSE 100 Index, was founded in 1940 and had a £4.781Bn turnover in 2017.