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DS Smith share price rallies as group inks deal to buy Europac

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Shares in DS Smith (LON:SMDS) have jumped in London this morning, as the company announced that it had inked a deal to buy Spain’s Europac for €1.9 billion (£1.66 billion). The move is aimed at boosting the blue-chip packaging group’s position in western Europe.

As of 09:29 BST, DS Smith’s share price had added 3.34 percent to 581.20p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.72 percent higher at 7,757.31 points. The group’s shares have added just under a third to their value over the past year, as compared with about a 2.9-percent gain in the Footsie.

DS Smith buys Europac

DS Smith announced in a statement this morning that it was proposing the acquisition of western European integrated packaging business Papeles y Cartones de Europa, known as Europac. The offer price of  €16.80 per Europac share values the entire share capital of the Spanish group at €1.7 billion, with an implied enterprise value of €1.9 billion.

“This acquisition will enhance our customer offer in Western Europe, a key packaging growth region, and help us meet the rising demand for our high-quality packaging and sustainable products,” DS Smith’s chief executive Miles Roberts commented in the statement.

The London-listed packaging group said that it will finance the acquisition by a £1-billion rights issue, as well as a new debt facility of €740 million.

Analysts on FTSE 100 group

The 12 analysts offering 12-month price targets for DS Smith for the Financial Times have a median target of 565.00p on the shares, with a high estimate of 620.00p and a low estimate of 500.00p. As of June 1, the consensus forecast amongst 13 polled investment analysts covering the blue-chip packaging group has it that the company will outperform the market. 

As of 09:59 BST, Monday, 04 June, DS Smith plc share price is 580.60p.

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