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DS Smith proposes to buy Interstate Resources for $920m

UK-based corrugated cardboard maker DS Smith has signed a conditional agreement to acquire a majority stake in US packaging firm Interstate Resources from Merpas for $920m.

DS Smith and its US subsidiary DS Smith Holdings have signed the deal to buy 80% of the total issued share capital of Indevco Management Resources, the holding company for the Interstate Resources group (IRI).

The IRI Group operates two paper mills for kraft linerboard and recycled corrugated medium, two timber and lumber operations, three corrugated container operations, three corrugated sheet plants, and one corrugated sheet feeder.

Its primary market is the Eastern seaboard of the United States with a commitment to the South and Midwest.

Last year, the group sold 342,000 t of kraftliner and 192,000 t of recycled linerboard and had corrugated sales volumes of 440m m² . The IRI group emplays more than 1,500 people and recorded sales of $618m for the year ended 31 December 2016.

DS Smith, which has the option to acquire the remaining 20% interest over five years, will assume about $226m of the family-owned business' debt.

The deal, which will immediately add to DS Smith's earnings, allows it foray into the US market.

The agreement is being funded by DS Smith via a cash payment of $846m and issue of shares worth $300m to Merpas.

Commenting on the proposed acquisition, DS Smith's Group chief executive Miles Roberts said: “We have seen significant customer pull for our innovative packaging solutions in the US and are excited by the opportunity to grow and support our customers' needs over this large and growing market.

“It is a further important step in our strategy, further building a higher quality, higher margin group with more growth potential.”


Image: Interstate Container exhibited Greencoat wax-free, coated, recyclable boxes during the International Production and Processing Expo at the Georgia World Congress Center in Atlanta, Georgia. Photo: courtesy of Interstate Resources, Inc.