UK-listed DS Smith has entered a conditional agreement to acquire 80% of US corrugated packaging business Interstate Resources for $920m.

With the deal, signed with Merpas, DS Smith will also assume or procure repayment of 100% of the Interstate Resources Group's financial indebtedness at completion which is expected to amount to $226m.

As part of the agreement, DS Smith will buy the total issued share capital of Indevco Management Resources, (IMRI), the holding company for Interstate Resources. IMRI and its subsidiaries together are known as the IRI Group.

The consideration of the initial acquisition is subject to customary post-completion net debt and working capital adjustments.

"We are excited by the opportunity to grow and support our customers' needs over this large and growing market."

DS Smith Group chief executive Miles Roberts said: “We are delighted to announce the proposed acquisition of Interstate Resources, a well-positioned and attractive entry point for us into the US market.

“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.

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“It is a further important step in our strategy, further building a higher quality, higher margin group with more growth potential.”

Under the agreement, DS Smith will pay $846m of the consideration in cash and issue shares with a value of $300m to Merpas.

Both parties also agreed that on fixed dates over the next four years, Merpas can request DS Smith purchase some or all of the remaining shares of IMRI on agreed terms.

The IRI Group, which includes IMRI and its subsidiaries, is a family-owned integrated packaging and paper producer based on the east coast of the US.

It owns 19 production sites and has nearly 1,500 employees.

Operating across the entire packaging chain including procurement, design, manufacturing, and customer logistics, the company reported revenue of $618m last year.