The company completed the Europac acquisition in January and continues to focus on its core businesses.
DS Smith announced it has reached agreement to sell its Plastics division to Olympus Partners for an enterprise value of $585m, (approximately £450m). This represents a multiple of 9.9x EBITDA based on the past 12 months to 31 October 2018, the company explains. The transaction is subject to customary closing conditions including regulatory approvals, with completion expected to take place in the second half of this calendar year. DS Smith expects net cash proceeds after taxation, transaction adjustments and expenses of approximately £400m.
The Plastics division comprises the plastics operations of DS Smith, including flexible plastics, rigid plastics and foam products. Gross assets of the business as at 31 October 2018 were £223m and profit before tax for the 12 month period to 31 October 2018 was £28m.
The company said that this sale represented an important step in its progress as a leading company in sustainable packaging and accelerates the programme of deleveraging, alongside organic cashflow. The cash proceeds are expected to be used to reduce the financial gearing of DS Smith plc, in line with its medium-term target of net debt / EBITDA at or below 2.0x. The sale is expected to result in a substantial exceptional gain and be marginally EPS dilutive.
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