TIDMSMDS
RNS Number : 5333F
Smith (DS) PLC
23 February 2015
23 February 2015
DS Smith Plc
Proposed acquisition of Duropack and trading update
Proposed acquisition of Duropack
DS Smith Plc ("DS Smith"), the leading provider of recycled
corrugated packaging in Europe, is pleased to announce the proposed
acquisition of the Duropack business ("the acquisition") for
approximately EUR300m (c.GBP220m). Duropack, a recycled corrugated
board packaging business with market-leading positions across South
Eastern Europe, is being acquired from CP Group 2 BV, a One Equity
Partners subsidiary.
The acquisition is highly complementary to DS Smith's geographic
footprint and transforms our position in higher-growth South
Eastern European geographies, further strengthening our
pan-European capabilities to our existing customer base in addition
to providing access to new customers.
Duropack has number one or two market positions in many of the
geographies in which it operates and, combined with DS Smith's
existing operations in Hungary, Slovakia and Austria, will have a
leading position across South Eastern Europe.
The business is well invested with high quality assets and
operates a "short paper, long fibre" model similar to that of DS
Smith.
In 2014 the business delivered EBITDA of EUR41 million and EBIT
of EUR22 million on turnover of EUR273 million. Cost synergies of
EUR12 million, are expected to be realised within three years of
ownership. The additional investment required to integrate the
acquisition is c.EUR13 million, incurred over the first two years.
This will be funded by cash savings, driven by working capital
efficiencies and tight cash management.
The total consideration, including the assumption of debt, is
expected to be circa EUR300 million, subject to customary
post-closing adjustments, representing a post synergy multiple of
5.7 times EBITDA.
The acquisition is being financed from existing debt facilities.
It will be immediately accretive to earnings per share and generate
a return above our cost of capital during the second year of
ownership.
The acquisition is subject to competition clearance, which we
expect in calendar Q2, with completion shortly thereafter.
Trading update
In the three month period to 31 January 2015, the business has
continued to perform in line with our plans. Volumes have been
ahead of the run-rate achieved in the first half of the year and
remained positive in all regions, with Central Europe and Italy
particularly strong. We are delighted by the initial customer
reaction to our recent acquisition of Andopack and performance
there has been in line with our expectations.
On 30 January 2015, we completed the disposal of our testliner
mill in Nantes, France, which had capacity of c. 60 thousand
tonnes. This transaction is in line with our strategy to exit paper
manufacturing which does not sufficiently complement our Packaging
business. There will be an exceptional charge of GBP9 million, of
which GBP7 million is non-cash.
Our outlook remains positive as the business continues to
perform in line with our medium term financial targets, despite
economic headwinds in many of our markets, and the Board views the
future with confidence.
Miles Roberts, Chief Executive of DS Smith said:
"Duropack is an excellent business and a highly complementary
fit. It is a further important step in our strategy to leverage our
scale and strengthen our geographic footprint. Duropack has high
quality assets with market leading positions. We look forward to it
contributing to the overall growth of DS Smith in attractive
markets where we were previously under-represented.
Since our half-year, we have continued to make good progress
with our customers, benefitting from our differentiated commercial
offering and the ongoing roll out of our design centres. Our volume
performance has been strong, as the rapidly changing retail
environment and consumer buying patterns make well-designed
recycled packaging increasingly relevant."
Enquiries:
DS Smith Plc +44 (0)20 7756 1800
Hugo Fisher, Group Communications Director
Rachel Stevens, Investor Relations Manager
Bell Pottinger
John Sunnucks +44 (0)20 3772 2549
Ben Woodford +44 (0)20 3772 2566
Conference call
There will be a conference call this morning at 08:30am (London
time) for investors and analysts, hosted by Miles Roberts, Group
Chief Executive, and Adrian Marsh, Group Finance Director. Log in
details are +44 (0) 20 3003 2666 (standard access) or 0808 109 0700
(UK Toll Free) Password: DS Smith. Slides to accompany the call
will be available on our website approximately 15 minutes in
advance of the call. A play-back facility of this call will be
available until 2 March 2015. The dial-in number is: +44 (0) 20
3350 6902, access pin: 7058484#. A recording and transcript of the
call will also be available through the Investor Relations section
of our website: www.dssmith.com
Further details on Duropack
Geographic presence: 14 corrugated packaging sites, 2 paper
mills and 18 recycling sites across 9 countries comprising Austria,
Hungary, Bosnia, Bulgaria, Macedonia, Serbia, Slovakia, Croatia and
Slovenia.
Volumes: c.565msm corrugated packaging, c. 208kt testliner
production and c. 160kt recycled paper collection.
Financial details: Gross assets of EUR281 million as at 31
December 2014; 2014 profit before tax of EUR15 million.
NOTES TO EDITORS
DS Smith is a leading provider of corrugated packaging in Europe
and of specialist plastic packaging worldwide, operating across 25
countries and employing 21,500 people. Our vision is to become the
leader in recycled packaging for consumer goods through offering
great service, quality, innovation and environmental solutions to
our customers. Formore information, visit www.dssmith.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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