DS Smith in reverse takeover of SCA Packaging
The recycled packaging firm, DS Smith, has launched an agreed bid for SCA Packaging, the second biggest packaging business in Europe.
The recycled packaging firm, DS Smith, has launched an agreed bid for SCA Packaging, the second biggest packaging business in Europe.
DS Smith, with a market capitalisation of around £0.9bn, is paying €1.6bn (£1.3bn) for the Swedish company, excluding SCA's kraftliner assets.
The purchase will be funded from new and existing debt as well as an underwritten £466m rights issue.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The new shares will be offered to shareholders at 95p each on the basis of 9 new shares for every 8 shares currently held.
The reverse takeover needs to be approved by shareholders but, given the support the company has had for its rights issue, this looks probable; shareholders including 14.6% stakeholder Standard Life Investments, have already indicated their approval of the acquisition and the accompanying rights issue. Shareholders have already committed to sub-underwrite more than 50% of the rights issue.
DS Smith believes the acquisition would be earnings enhancing and that, while the purchase would increase gearing, the net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio should be back down to 2.0 by the end of the first full financial year following completion.
The acquisition should deliver annualised pre-tax cost synergies of at least €75m per annum and cumulative capital expenditure and working capital benefits of at least €40m by the end of the third full financial year following completion, the bid announcement said.
Commenting on the acquisition, DS Smith's Chief Executive, Miles Roberts, said: "This is an exceptional opportunity to create value for shareholders by becoming the leading recycled packaging company across Europe".
"SCA Packaging is a well invested business with long positions in recycling and packaging and short paper capacity that is very complementary to our strengths," Roberts added.
The market gave the thumbs-up for the transformational deal, with the shares rising 11.4p to 215p in early trading.
BS/JH
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Michelin Key Hotels 2025: the top destinations in the world
The Michelin Keys have been awarded to spectacular hotels across the world. From Marlon Brando's private resort in Polynesia to a Bvlgari hotel in Tokyo, we look at some of the most extraordinary stays in 2025
-
MoneyWeek news quiz: How much could you get in car finance compensation?
The car finance scandal, inheritance tax, and house prices all made headlines over the past few days. Test your knowledge while reviewing this week’s top stories with MoneyWeek’s news quiz