LONDON (Updated Jan. 18, 4 p.m. ET) — Packaging major DS Smith plc of
SCA has a thermoforming business outside North America, having sold its North American thermoforming and plastics operations in 2007 to
Current SCA plastics plants are in Urshult and
SCA said in a Jan. 17 news release that it wants to focus on the sanitary papers aspects of its business.
“The reason for the divestment is primarily to enable increased growth in the hygiene business,” stated SCA President and CEO Jan Johansson. SCA's packaging business comprising paper and plastics but excluding two kraft paper liner mills in Sweden which are not included in the deal, had sales of Euros 2.5 billion and operating profit of Euros 117 million in 2010.
DS Smith's Plastics division has several businesses in the
Worldwide, Rapak and Worldwide Dispensers have facilities in the
The SCA packaging purchase is subject to approval from DS Smith shareholders and antitrust clearance from the European Commission. The parties expect to finalize the deal in the second quarter of 2012.
SCA Packaging is the second largest packaging business in
The agreed-on purchase price is about a 6.3 multiple of the packaging business's EBITDA for the 12-month period ending in the third quarter of 2011.
“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,” noted Johansson in a news release.
“This is an exceptional opportunity to create value for shareholders by becoming the leading recycled packaging company across
DS Smith's Plastics segment recorded sales of 133.9 million pounds ($206.3 million) for the half year ended Oct. 31, an 8 percent hike. Operating profit rose 11 percent to 10.4 million pounds ($16 million). Return on sales was 7.8 percent and the 12-month return on average capital employed, before amortization and exceptional items, was 15.7 percent. DS Smith's total sales, including paper products, was 1.03 billion pounds ($1.58 billion) for the six month period.
The plastics liquid packaging and dispensing business had good growth in the