DS Smith says big deal going according to plan

DS Smith, which supplies recycled packaging for consumer goods, said it was on track with its planned acquisition of Europe's second biggest packaging business, SCA Packaging.

Smith announced in January that it would pay €1.6m for the Swedish firm.

Application was made to the European Commission for competition clearance, on 28 March 2012, it said.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues 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

Sign up

It has also got the deal past French works councils, which means that part of the business should be sold at the same time as the rest of SCA, the company said.

It aims to complete the takeover at the end of June 2012.

"We are delighted with the support for the transaction given to us by our shareholders and I am pleased to report that the process towards completion is on track," said Chief Executive Miles Roberts.

In terms of sales, Smith said like-for-like volume growth in corrugated packaging for the financial year to date was in line with its target of GDP+1%.

This was driven by a consistent performance among the company's fast moving consumer goods customers, with a strong contribution from its business in Continental Europe.

Smith's said it continued to reduce working capital and anticipated achieving its target of average working capital-to-revenue of 5% at the end of the year, compared to 6.4% last year.

The return on average capital employed for the year was expected to be within the company's target range of 12 to 15%, compared to 11.5% the previous year, the firm said.