DS Smith expands footprint in recycled packaging

The company says that the move aims to fulfill ambitions to win business from some of the worlds biggest consumer goods companies, including major cosmetic and personal care players such as Procter & Gamble, Unilever and Reckitt Benckiser.

Executives believe the move will help to improve its recycling capabilities, falling in line with requirements of some of the world’s biggest consumer goods companies, who are all looking to fulfill tough ambitions to reduce their carbon footprint in the coming years.

Move towards recycled cardboard​

As part of moves towards this type of goal, many such manufacturers are moving towards recycled cardboard as opposed to virgin paper for many types of corrugated board, which is invariably used to transport fast moving consumer goods in bulk.

DS Smith says it will finance the acquisition with existing and additional credit lines, together with a new ordinary share issue that is expected to raise approximately £466m (€561m).

The SCA group is one of the largest consumer-specific packaging companies in Europe and has approximately 13,500 employees in 172 locations situated in 25 countries throughout the continent, with total sales of €11.5bn in 2010.

Focusing on Northern Europe and the Nordic countries​

For the most part SCA’s business operations are in Northern Europe and Nordic countries, which also falls in line with DS Smith’s main geographic reach.

SCA’s packaging business has been the subject of merger and acquisition speculation for some time n on account of the fact that the division has been struggling financially for a number of years.

Its remaining mainstay business is the manufacture of personal care and tissue products, which include diapers and incontinence care, together with tissue brands that include Libero, Tempo and Tena.

DS Smith assumes leading recycled packaging role​

Commenting on the Acquisition, DS Smith's Group Chief Executive, Miles Roberts said that the acquisition would serve to make the company the leading recycled packaging business in Europe.

“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,”​ Roberts added.

The deal has been welcomed by investors and analysts across the board, who see the acquisition as a good fit for DS Smith and complimentary to its existing business operations. Shares in the company rose by 4.6 per cent in mid-day trading on the UK FTSE, to 213.1