DS Smith Plc - Proposed Acquisition of SCA Packaging and Rights Issue

Creation of a leading pan-European recycled packaging business

DS Smith Plc has today announced the proposed acquisition of the packaging division of Svenska Cellulosa Aktiebolaget SCA for a net consideration of approximately €1.6 billion (c. £1.3 billion*).

SCA Packaging is the second-largest packaging business in Europe. Its packaging operations are divested to DS Smith, with the exception of its two kraftliner mills in Sweden, which are already well integrated with SCA’s forest products operations.

Commenting on the acquisition, DS Smith’s Group Chief Executive, Miles Roberts, said:

“This acquisition builds on DS Smith’s proven strategy and the successful acquisition of Otor. This is an exceptional opportunity to create value for shareholders by becoming the leading recycled packaging company across Europe – a company that will be better positioned to deliver even better service and innovation to our strong and growing FMCG customer base. SCA Packaging is a well-invested business with long positions in recycling and packaging and short paper capacity that is very complimentary to our strengths. It is a great step in DS Smith’s development and I look forward to working together with the team at SCA Packaging to create an outstanding supplier for our customers and making it a fulfilling place for our staff to work to deliver substantial value for our customers and Shareholders.”

DS Smith’s Chairman, Gareth Davis, said:

“This acquisition is a unique opportunity, offering the combination of a clear strategic rationale, potentially excellent financial returns and a step change in DS Smith’s capabilities to deliver the recycled packaging service that our customers increasingly want on a pan-European basis. We recognise both the opportunities and the challenges that the acquisition will bring and we have planned and invested accordingly. We are focussed 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.”

A statement from Jan Johansson, President and CEO of SCA, said:

“The reason for the divestment is primarily to enable increased growth in the hygiene business…Over the years we have developed our packaging business and we are divesting a competitive operation to an industrial buyer who can continue to develop it ”.

The transaction is subject to approval from DS Smith´s shareholders and antitrust clearance from the European Commission. Closing is expected during the second quarter of 2012. DS Smith will publish a prospectus regarding the transaction. DS Smith´s financing of the transaction is committed.

For full details of the proposed transaction, please visit www.dssmith.uk.com/news.

*Based on an exchange rate of €1.00 to £0.8263 on 16 January 2012.