DS Smith makes bid for Otor
PACKAGING and office products company DS Smith has extended its reach in Europe with the purchase of Otor from private equity group Carlyle.
DS Smith has made a £206m bid for 95 per cent of the French packaging firm, with the rest of the deal value consisting of assumed debt.
The firm, which has a market cap of £495m, will fund the deal with existing and new bank facilities, and through placing 39m shares. The firm began courting Otor in March, when owner Carlyle put it up for sale.
DS Smith chief executive Miles Roberts told City A.M.: “It’s a major step forward for us. It will mean higher margins, higher returns on the business and a sustainable dividend payment.”
The acquisition gives DS Smith more exposure to the fast-moving consumer goods sector to complement its existing packaging operations in France. It has contracts with Nestle, Danone, Proctor & Gamble.
Roberts said the purchase marks the start of the firm’s refocus on European business, but would not be drawn on whether the strategy will involve cuts to its UK operations.
“Some areas of the business are more attractive to shareholders than others. Exactly what the make up of the company will be is not clear yet.” He said the company would provide details on its strategy later in the year.
Shares in DS Smith closed 2.7 per cent up at 128.7p yesterday.
FAST FACTS | DS SMITH
DS Smith is a FTSE 250-listed company with UK operations in paper, packaging and recycling.
It installed Miles Roberts as CEO in May and resumed dividends last week after posting a profit of £55m, a 227 per cent rise on the year.
MALCOLM MOIR, MARK BREUER AND NIKLAS KLOEPFER
JP MORGAN CAZENOVE
MALCOLM Moir is a managing director at JP Morgan Cazenove, and led the team advising DS Smith on yesterday’s purchase and share placing. He has also worked with Babcock on its takeover bid for VT, and acted for First on its failed bid for National Express.
Mark Breuer is a vice chairman who previously served as head of its mergers and acquisitions team. He was one of five JP Morgan executives to make the board in 2008, after moving to the firm as part of Cazenove in 2004.
He advised on L’Oreal’s acquisition of The Body Shop. He also acted for George Wimpey on its merger with Taylor Woodrow.
Breuer played a key role in Linde’s acquisition of rival BOC, and is currently advising Chloride following an offer by Emerson Electric. He was a prominent figure in KKR’s acquisition of Boots.
Breuer also led the team which helped Manitowoc acquire Enodis in 2008. Niklas Kloepfer, who was also part of the Manitowoc team, is a vice president at JP Morgan. He has previously worked at HSBC and Dresdner Kleinwort.
Allen & Overy advised DS Smith on the legal side of the deal. Carlyle worked on the sale in-house, but took on French law firm Darios Villey for the legal aspects.