NETHERLANDS – British multinational packaging group DS Smith has agreed to divest its De Hoop paper mill in the Netherlands to De Jong Packaging for €50 million, as part of its strategy to focus more on light-weight fiber-based packaging.
The De Hoop mill produces 370,000 tonnes of mainly heavier grades of recycled paper per year and its continued stay in DS Smith was no longer necessary as the company enjoys access to a greater amount of external capacity.
Under the terms of the deal, DS Smith will continue to purchase from and supply to the paper mill a certain amount of containerboard and fibre to support a smooth transition.
Upon completion of the transaction, De Hoop will be the sole internal paper mill for De Jong’s packaging business, which serves the fresh produce and industrial markets.
DS Smith says it will use the proceeds to partly offset investments made in its packaging capacity this year, including two new corrugated box plants in Italy and Poland and a significant expansion of its Arnstadt packaging facility in Germany.
“We are pleased to have reached this agreement for the De Hoop Paper mill,” Miles Roberts, DS Smith CEO, said.
“While this represents another step to further realign our network of paper mills with the needs of our FMCG and ecommerce led sustainable packaging strategy, we have also found a good home for De Hoop in De Jong Packaging.”
DS Smith’s increased focus on light-weight fibre-based packaging is happening at a time when the global fiber-based packaging market is expected to grow at a CAGR of 3.8% in terms of revenue by 2025, according to data from Transparency Market Research .
Based on the market’s current valuation, the market research firm predicts the fiber-based packaging market will grow to US$383.5 billion by the end of 2025.
By the end of forecast period, Transparency Market Research further forecasts that food packaging will have nearly a 40% share in the overall fiber-based packaging market.
Commenting on the growing importance of food packaging Packaging World’s Anne Marie Mohan wrote: “It is increasingly preferred by consumers due to its advantage of being lightweight and cost-effective”
“Factors such as easy availability of raw materials are attracting manufacturers to this packaging,” Mohan added.
DS Smith’s increased investments in new plants across Europe, therefore, place it in a vantage position to take advantage of the growing demand for fiber-based packaging.
The transaction is subject to customary closing conditions and is expected to be completed in the second quarter of DS Smith’s full-year 2021/22.
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