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DS Smith targets SCA packaging operations

Sweden – SCA is set to divest its packaging operations – excluding two kraftliner mills in Sweden – following a formal offer from UK-based DS Smith.

With the purchase price amounting to Euro 1.7 billion, the transaction is subject to approval from DS Smith’s shareholders and anti-trust clearance from the European Commission; closing is expected during the second quarter of this year.

Employing around 12 000 people, the packaging operations tied into the proposed deal enjoyed net sales in 2010 of approximately SEK 24.2 billion (Euro 2.5 billion). According to Jan Johansson, President and CEO of SCA, the objective behind the sale ‘is primarily to enable increased growth in the hygiene business’. He adds: ‘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.’

DS Smith talks of this move as ‘an exceptional opportunity’ to accelerate its strategy to become ‘the leading supplier of recycled packaging for consumer goods in Europe’. SCA Packaging is the second-largest packaging business in Europe ‘with strong positions in recycled consumer packaging’, it adds. ‘The assets of SCA Packaging are situated in geographies highly complementary to those of DS Smith. In combination, the enlarged group will be in a leading position in the main European markets.’

In 2010, says DS Smith, SCA Packaging sold 3.621 million tonnes of recycled fibre and recorded a corrugated sales volume of approaching 1.8 million tonnes.

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