DS Smith Announces Sale of Plastics Division
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DS Smith (London, U.K.) on March 6 was pleased to announce it has reached agreement to sell the Plastics division to Olympus Partners for an enterprise value of $585 million, (approximately GBP 450 million). This represents a multiple of 9.9x EBITDA based on the past 12 months to October 31, 2018. The transaction is subject to customary closing conditions including regulatory approvals, with completion expected to take place in the second half of this calendar year. We expect net cash proceeds after taxation, transaction adjustments and expenses of approximately GBP 400 million.
The Plastics division comprises the plastics operations of DS Smith, including flexible plastics, rigid plastics and foam products. Gross assets of the business as at October 31, 2018 were GBP 223 million and profit before tax for the 12 month period to October 31, 2018 was GBP 28 million.
This sale represents an important step in DS Smith’s continued progress as a leader in sustainable packaging and accelerates the program of deleveraging, alongside organic cashflow. The cash proceeds are expected to be used to reduce the financial gearing of DS Smith plc, in line with our medium-term target of net debt / EBITDA at or below 2.0x. The sale is expected to result in a substantial exceptional gain and be marginally EPS dilutive.
