DS Smith to divest plastics division

With the aim of concentrating entirely on its core business of sustainable packaging, the British packaging group DS Smith (LON:SMDS) has decided to shed its plastics division, which operates in the flexible, rigid, foam and injection-moulded packaging segments.

Image credits: DS Smith plc

The business will be acquired by the private equity fund Olympus Partners (USA) for an enterprise value of $585 million, a multiple of 9.9x EBITDA based on the past twelve months.

On 22 January, the British group completed the takeover of Spain’s Europac group, one of the most innovative sustainable packaging producers in Europe and the only producer of kraftliner and coated papers in southern Europe, in a deal worth $2.2 billion.

With 25 manufacturing sites spanning twelve countries in Europe, North America, Asia and Australia, DS Smith’s Plastics division has gross assets of £223 million and pre-tax profits of £28 million.

The deal is subject to approval from the antitrust authorities and is expected to close in the second half of 2019.