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DS Smith/SCA deal creates recycled packaging giant

United Kingdom/Sweden – UK-based DS Smith Plc has completed the acquisition of the packaging division of Svenska Cellulosa Aktiebolaget (SCA), excluding the kraftliner assets, for around Euro 1.6 billion. ‘€˜SCA Packaging is the second largest packaging business in Europe and the acquisition represents a significant opportunity for DS Smith to achieve its stated strategic aim of becoming the leading supplier of recycled packaging for consumer goods in Europe,’€™ the buyer says in a statement.

The board of DS Smith believes the acquisition, first announced at the start of the year, will ‘€˜drive growth’€™ and add value for its shareholders by: providing access to new geographical markets across Continental Europe; developing broader relationships with existing customers as well as the potential to win new customers through increased ability to supply and innovate new products and improve service levels.

This is stated to drive further benefits from the enlarged group’€™s operational structure, utilising the strengthened resource in key commercial and operational functions of DS Smith’€™s business; and delivering estimated annualised pre-tax cost synergies from procurement and operational efficiencies of at least Euro 75 million per annum, and cumulative capital expenditure and working capital benefits of at least Euro 40 million by the end of the third full financial year following completion.

Already in the UK, DS Smith operates 28 corrugated factories, three paper mills and 15 recycling depots, while its Continental corrugated segment is comprised of 27 operations spread across France, Italy, Poland, the Czech Republic and Slovakia.

Miles Roberts, DS Smith’€™s Group Chief Executive, says: ‘€˜The SCA Packaging business is very complementary to DS Smith’€™s strengths and creates a significantly enlarged geographic footprint. Together, we are now better positioned to meet the needs of our pan-European customers, deliver higher standards of customer service and drive forward product innovation.’€™

SCA’€™s two kraftliner mills in Sweden are not included in the transaction ‘€˜as they are well integrated with SCA´s forest products operations’€™, states the Swedish group.

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