DS Smith Plc, a British maker of corrugated cardboard, recycled paper and plastic packaging, said it had agreed to buy 80 percent of Interstate Resources, a U.S. corrugated packaging business, from Merpas Co for $920 million. DS Smith, which has the option to buy the remaining 20 percent over five years, will take on $226 million of the family-owned business' debt.
The deal will immediately add to DS Smith's earnings, giving it an entry into the American market. DS Smith, which makes corrugated trays, soft plastic containers, transport packaging and display cases, also said it would fund part of the acquisition by raising about 285 million pounds through an underwritten placing of new shares at 10 pence each.
The company, which was founded in 1940 as a box-making businesses in East London, also reported a 31 percent jump in pretax profit to 264 million pounds ($342 million) for the year ended April, driven by acquisitions and demand from its European customers. Revenue rose 18 percent to 4.78 billion pounds. Analysts expected a pretax profit of 296.17 million pounds and revenue of 4.69 billion pounds, according to Thomson Reuters.