DS Smith expands in America with US$920mln acquisition of 80% of Interstate Resources

04:21 EDT 29 Jun 2017 | Proactive Investors

DS Smith PLC (LON:SMDS) is expanding in America with the paper and plastic packaging group set to buy 80% of Interstate Resources, a US corrugated packaging business, from Merpas Co for US$920mln (around £722mln). The FTSE 250-listed firm, which will have the option of buying the remaining 20% of Interstate over five years, will pay cash and shares for the business and take on US$226mln of the family-owned firm’s debt. DS Smith will part-fund the deal by raising around £285mln via an underwritten placing of new shares at 10p each, representing around 7% of the firm’s current market capitalisation. The group said the deal, which will immediately enhance its earnings, gives it an entry into the American market. DS Smith's group chief executive, Miles Roberts, said “We have seen significant customer pull for our innovative packaging solutions in the US and are excited by the opportunity to grow and support our customers' needs over this large and growing market. “It is a further important step in our strategy, further building a higher quality, higher margin group with more growth potential” Another year of good growth for DS Smith Aside from the acquisition and placing, DS Smith also reported full-year results showing a 31% jump in pretax profit to £264mln, albeit below consensus expectations for £296mln, as revenue rose by 18 % to £4.78bn, beating estimates for £4.69bn. Commenting on the results, Roberts said: "We are delighted to report another year of good growth for DS Smith, delivered through a combination of acquisitions and organic development.” He added: “This progress has continued into the new financial year. Full recovery of the recent paper price rises is progressing well and as expected.” DS Smith has proposed a final dividend of 10.6p, up from 8.8p a year earlier, giving a total payout of 15.2p, up from 12.8p.

Original Article: DS Smith expands in America with US$920mln acquisition of 80% of Interstate Resources


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