The UK-based packaging company DS Smith has launched a takeover bid to acquire 100% of the shares in the Spanish company Papeles y Cartones de Europa, known as Europac. The price of the deal is 16.80 euros per share, which represents an equity of 1.67 billion euros.

The acquisition was decided at the DS Smith board meeting and was sent to the CNMV on June 4. It must now be validated by the shareholders meeting, which will be held no later than July 11. It also requires the approval of the Spanish competition authority and Europac's shareholders.

To complete the deal, Europac will need the acceptance of the holders of at least 50% plus one share, an undertaking DS Smith says it already has.

According to DS Smith, it will finance this acquisition by a shares issue for a value of 1.17 billion euros and a line of credit for another 746 million.

Europac's response
In a communication sent to the CNMV on the same day, June 4, Europac announced that its board of directors had received a letter containing the offer last May 15, subject to certain preconditions. One of them was the requirement for a confirmational audit, whose opening was approved one day later. It was also decided to set up a work committee to monitor the deal, comprising two board members with no conflict of interest.

On May 30, before the work committee issued its report favorable to the takeover bid, the board of directors agreed to sign the compensation agreement, whereby DS Smith undertakes to pay Europac 69.36 million euros if it fails to obtain validation for the deal from its shareholders. In exchange, Europac agrees to pay DS Smith 15.65 million euros in the case another rival takeover bid is approved by the CNMV and acquires the Spanish company.

Europac is a family-run packaging business that is number one in the Portuguese market and fourth in France and the Iberian Peninsula. Its 27 industrial facilities in Portugal, France and Spain generate 2,300 direct jobs, and it has an annual turnover of 1.1 billion euros.

One month before the announcement of the takeover bid, the board of directors of the Europac group approved the accounts for the first quarter of 2018, with a profit of 25 million euros, a staggering 126% more than in the same period in the previous year. The aggregate turnover from January and March was up by 13% to 318 million euros.