DS Smith plans £1bn rights issue to fund Spanish acquisition

DS Smith has launched a £1bn (€1.15bn) rights issue to fund the €1.7bn acquisition of smaller Spanish packaging rival Europac.

DS Smith, which announced the proposed acquisition at the start of the month, on Tuesday revealed plans for a 3-for-11 rights issue at a price of 350p per new share.

Some 293m new ordinary shares will be issued, representing just over 27.3% of the current issued share capital, which has been fully underwritten by investment banks.

The issue price represents a discount of approximately 30.9% to the theoretical ex-rights price based on the closing mid-price of 549.6p per existing share on 18 June.

Shareholders in the FTSE 100 company will decide whether to complete the acquisition at a 10 July meeting.

DS Smith directors believe the acquisition has a "highly compelling strategic rationale" and expect it will create "consistent and attractive returns" for shareholders by expanding scale in a key packaging growth region, offering the opportunity to develop Europac's packaging assets, strengthening the group's global supply chain and offering annual run-rate pre-tax cost synergies of around £44m.