DS Smith eyes European expansion with Otor acquisition

By Rory Harrington

- Last updated on GMT

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DS Smith said it has made a binding offer to take over French corrugated packaging company Otor for €247m (₤207m) in a bid to expand its French market share and boost its overall European position.

Under the terms of the deal, the UK company would initially acquire more than 95 per cent of Otor’s shares from The Carlyle Group before making an offer for the remaining shares under French financial law. The proposed purchase, subject both to regulatory and shareholder approval, is expected to be completed in the fourth quarter of 2010.

Strategic goals

The acquisition would meet key strategic goals for the company, including a reduced reliance on the UK market and an enlarged presence in the large and more resilient fast moving consumer goods (FMCG) segment of the French corrugated French sector, said DS Smith.

The move will also strengthen its position in the wider European market and equip it with a better product and market mix. The company highlighted opportunities for expansion in Italy and Poland where it already has a presence. The deal would also serve to alleviate the effect of the paper cycle on the company and improve its profit margins.


After the initial €3m rationalisation and integration costs, DS Smith forecast annual synergies from the takeover would reach €9.3m and be fully achieved within the second full year of ownership.

“These synergies are expected to arise from cost reduction principally through the elimination of duplicate head office costs and other functions, purchasing optimisation and bringing out-sourced services in house”,​ said a DS Smith statement

Otor specialises in manufacturing recycled corrugated board packaging mainly for transportation and sale of food products. It has a turnover of €315m and employs 560 people across15 sites in France. The group’s six box plants produce 1.7 billion packages per year, or the equivalent of 750 million m² of corrugated board. Otor also owns paper mills and a specific site for the construction of packaging and processing machines.

DS Smith chief executive Miles Roberts said: “The acquisition of Otor realises a number of key strategic objectives for DS Smith. It makes us one of the leading players in corrugated packaging in France with 80 per cent of Otor’s sales derived from the fast moving consumer goods sector (FMCG)”

He added he was confident the company was a good buy with good growth opportunities particularly in shelf-ready packaging.

Otor CEO Jean-Marie Paultes said the acquisition would take the company “to the next level of development”.

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