Sustainable packaging solutions provider Liqui-Box has agreed to acquire DS Smith’s plastic division for an enterprise value of around $585m.
Liqui-Box, a portfolio company of Olympus Partners, manufactures bag-in-box flexible packaging, fitments and pouches to serve various global industries.
DS Smith Plastics, which includes Rapak and Worldwide Dispenser businesses, will help Liqui-Box to enhance its design capabilities and service platform to better serve its customers.
Liqui-Box CEO Ken Swanson said: “The combination with DS Smith Plastics advances our strategic initiative to create the leading innovator of sustainable flexible and rigid packaging solutions.”
Based in Chicago, the plastic division of DS Smith provides sustainable flexible packaging and dispensing solutions, plastics extrusion, injection molded and foam products.
With more than 2,000 employees, the plastic division operates 26 facilities in North America, Europe and Asia-Pacific.
As of 31 October 2018, the division has gross assets of £223m. The profit before tax for the 12 month period to 31 October 2018 was £28m.
DS Smith said the sale represents a significant step in its continued progress as a leader in sustainable packaging and optimizes the program of deleveraging, alongside organic cashflow.
The company intends to use the cash proceeds from the deal to reduce its financial gearing with medium-term target of net debt / EBITDA.
Subject to customary closing conditions including regulatory approvals, the deal is expected to complete in the second half of this calendar year.
Once the deal concludes, the combination of Liqui-Box and DS Smith Plastics will operate 35 manufacturing plants across five continents, as well as hold advanced converting and molding equipment platform to produce quality products.
The combined business will also have expanded R&D resources and innovation capabilities with multiple labs and testing facilities, and materials and process advancements to support environmentally sustainable products.
DS Smith Group chief executive Miles Roberts 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.”