DS Smith Plc, U.K., a producer of corrugated cardboard, recycled paper, and plastic packaging, has agreed to buy 80% of Interstate Resources, Arlington, Va., USA, a corrugated packaging business, from Merpas Co. for $920 million (£709 million). 

DS Smith, which has the option to buy the remaining 20% 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 U.S. 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 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% jump in pretax profit to £264 million ($342 million) for the year ended April 2017, driven by acquisitions and demand from its European customers.

Interstate Resources produces kraft linerboard, recycled corrugating medium, and corrugated packaging and displays in Georgia, Maryland, Massachusetts, New Jersey, North Carolina, Pennsylvania, South Carolina, and Tennessee.