US venture helps shares in packaging company DS Smith to record high
Shares in packaging company DS Smith have rocketed to record highs after the firm announced a deal to secure its first foray into the United States.
The FTSE 250 firm is snapping up an 80% stake in family-owned US paper and corrugated packaging business Interstate Resources for £722 million.
It will also pay £177 million for Interstate's debts and has the option to buy the remaining 20% in five years' time.
DS Smith saw its shares jump to an all-time high, hitting 487.8p at one stage before settling around 6 % higher.
Miles Roberts, chief executive of DS Smith, hailed the deal as a "well-positioned and attractive entry point for us into the US market".
He added: "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."
DS Smith's clients Nestle and Cadbury-backer Mondelez gave their thumbs up to the deal.
Interstate Resources focuses mainly on the East Coast of America, operating from 19 production sites with around 1,500 employees.
It had revenues of 618 million US dollars (£476 million) last year.
Details of the acquisition came as DS Smith posted a 6% rise in underlying pre-tax profits to £391 million for the year to April 30 with currency changes stripped out.
Bottom line profits were 16% higher at £264 million.