DS Smith Acquires SCA’s Packaging Operations

The U.K.-based company DS Smith has announced plans to acquire SCA Packaging for €1.7 billion (US$21.8 billion). The acquisition excludes two kraftliner mills in Sweden. SCA Packaging is the second largest packaging business in Europe. The deal will provide DS Smith with access to “new geographical markets across continental Europe,” according to a DS Smith news release.

Jan Johansson, president and CEO of SCA, says, “The reason for the divestment is primarily to enable increased growth in the hygiene business.”

Regarding the French part of the packaging operations, the price for which is included in the announced purchase price, DS Smith has made a formal offer to acquire this business. This process is subject to consultation with relevant works councils and will be treated separately.

“Over the years we have developed our packaging business, and we are divesting a competitive operation to an industrial buyer who can continue to develop it," Johansson adds.

By acquiring SCA Packaging, DS Smith becomes the largest supplier of recycled cartons for consumer goods in Europe.

Miles Roberts, DS Smith CEO, says, “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.”

The deal for SCA Packaging follows DS Smith’s purchase of a controlling stake in French packagers Otor SA in 2010. SCA Packaging is the second-largest packaging business in Europe and will provide DS Smith with access to “new geographical markets across continental Europe” and “substantially” improve earnings per share, DS Smith says.

The SCA Packaging Group, excluding locations of certain joint ventures, runs facilities in 21 countries, including 109 corrugated manufacturing locations and four recycled containerboard mills. Last year, the company sold 3.6 million metric tons of recycled fiber, 1.4 million metric tons of corrugated case material and had corrugated sales volumes of 3.4 million square meters.