Packaging company DS Smith has sold its plastics division to US private equity firm Olympus Partners for $585m (£445m).
The sale is part of the London-headquartered firm’s strategy to shift towards sustainable packaging, the company announced in a trading update today.
Read more: Rupert Soames joins board at DS Smith
The move will address investor concerns that the FTSE 100 firm took on too much debt with the £1.5bn acquisition of Europac in January this year, analysts said.
"The transaction is attractive both financially and strategically for DS Smith as, together with the acquisition of Europac, we reinforce our position as a leader in sustainable packaging with a clear focus on our fibre-based business,” DS Smith chief executive Miles Roberts said.
“My colleagues in the plastics division have worked hard to build the business into the success that it is today, and that quality has been recognised by Olympus Partners.”
Russ Mould, AJ Bell investment director, said: “The £400m sale of its plastics division to private equity may well win packaging firm DS Smith some brownie points with green campaigners given mounting concern about the environmental impact of plastic.
“However, while the company gives a nod to sustainability when revealing the rationale for selling the asset, in reality this is more about shoring up a somewhat over-extended balance sheet.”
DS Smith also announced that trading since 1 November last year has been in line with expectations, with a particular boost over the Christmas period.