DS Smith has secured approval from the European Commission competition authority for its acquisition of Swedish SCA Packaging for approximately €1.6bn.
The acquisition excludes SCA Packaging's two kraftliner mills, and DS Smith is required to divest three sites after the acquisition, which currently represent about 1% of the enlarged group profit.
DS Smith chairman Gareth Davis said buying SCA Packaging is an opportunity that offers the combination of a clear strategic rationale, potentially good financial returns, and broadens the company's European market.
"We recognise both the opportunities and the challenges that the acquisition will bring and we have planned and invested accordingly. We are focused and determined to integrate, develop and grow these two excellent businesses as the platform for delivering superior returns for our investors over the years to come," Davis added.
According to the Commission's preliminary investigation, the commitments offered by the companies addresses the concerns that the transaction may endanger competition for some types of packaging in the UK and France .
The Commission also said that there are some concerns in the Brittany region of France, as the merged companies would control the only three production sites in the region. Competitors supplying into that region will come across higher transport costs.
The merging parties offered to divest one of their two UK plants producing heavy-duty corrugated packaging, and one plant producing litho-laminated corrugated packaging, in an attempt to address the concerns.
The decision allows the company to proceed towards completion of the acquisition, as planned.