DS Smith to buy Spain's Europac for €1.67bn

DS Smith on Monday said it was buying Spanish packaging firm Europac for €1.67bn (£1.45bn), or €16.80 a share.

The acquisition, transaction expenses and the refinancing of Europac debt will be financed from a £1bn rights issue and a new committed debt facility of €740m (£645m, the company added.

DS Smith said the deal gives Europac an implied enterprise value of €1.9bn (£1.65bn) or 8.4 times earnings before interest, tax, depreciation and amortisation for the 12 months to March 31 2018, adding that its offer represented a premium of about 7% percent to Friday’s close

The acquisition had a “highly compelling strategic rationale” and expected it to create “significant value for customers and consistent and attractive returns for...shareholders”, DS Smith added.

The company estimated annual run-rate pre-tax cost synergies of €50m (£44m) and further integration benefits identified.

DS Smith said it had it had acceptances for 58.97% of Europac's share capital, including irrevocable undertakings from certain members of the Isidro family, who hold 42% of the stock, including executive chairman Jose Miguel Isidro, the executive vice-chairman and two further board members of Europac.

José Miguel Isidro Rincón said Iberia was Europe's third largest packaging market with "great growth potential".

"In my capacity as shareholder, I believe that the offer submitted by DS Smith, which upon implementation would result in a combination with Europac, would deliver important operating and commercial synergies for both companies," he said.