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DS Smith plans £1bn rights issue to fund Spanish acquisition
DS Smith has launched a £1bn (1.15bn) rights issue to fund the 1.7bn acquisition of smaller Spanish packaging rival Europac.
DS Smith, which announced the proposed acquisition at the start of the month, on Tuesday revealed plans for a 3-for-11 rights issue at a price of 350p per new share.
Some 293m new ordinary shares will be issued, representing just over 27.3% of the current issued share capital, which has been fully underwritten by investment banks.
The issue price represents a discount of approximately 30.9% to the theoretical ex-rights price based on the closing mid-price of 549.6p per existing share on 18 June.
Shareholders in the FTSE 100 company will decide whether to complete the acquisition at a 10 July meeting.
DS Smith directors believe the acquisition has a "highly compelling strategic rationale" and expect it will create "consistent and attractive returns" for shareholders by expanding scale in a key packaging growth region, offering the opportunity to develop Europac's packaging assets, strengthening the group's global supply chain and offering annual run-rate pre-tax cost synergies of around £44m.