DS Smith PLC (LON:SMDS) has confirmed that launch of a £1bn cash call with the proceeds to be used to partly fund its acquisition of Spanish rival Papeles y Cartones de Europa, known as Europac, for €1.67bn (£1.4bn) which was unveiled earlier this month
The FTSE 100-listed packaging group announced a fully underwritten, 3-for-11 rights issues which will see the firm issue 293mln new shares at 35p each.
The rights shares represent 27.3% of DS Smith’s existing share capital and 21.4% of its enlarged share capital following the acquisition.
Goldman Sachs and JPMorgan are acting as joint bookrunners for the right issue.
Announcing the Europac deal on June 4, DS Smith said the acquisition was an “exceptional scale opportunity” to enhance its customer offer in a key packaging growth region, as well as strengthening its global supply chain.
The company added that annual run-rate pre-tax cost synergies of €50mln had been identified, with the acquisition accretive to earnings per share and return on invested capital (pre-tax) to exceed the weighted average cost of capital in the first full financial year of ownership.