DS Smith is selling Spicers, its European office products wholesale business, to a Spanish company for £200 million.
The announcement sent DS Smith’s shares up 2.6 per cent, or 7p, to 272p in mid-morning trading.
Miles Roberts, chief executive, said there would be a gain for the company of more than £60 million following the sale to Unipapel.
DS Smith will use the proceeds to strengthen its recycled packaging business, expand coverage in Europe and repay debt.
In December the company said it would consider a sale of Spicers, the leading provider of office products in Western Europe, to pursue its aim of becoming the leading supplier of recycled packaging for consumer goods.
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Spicers is the market leader in Britain, Ireland, France and the Benelux, and has developing businesses in Germany, Spain and Italy. It made an operating profit of £24 million on sales of £715 million in the year to April 30.
DS Smith is in exclusive talks with Unipapel and will have to pay break fees of up to £11.2 million if a deal is not completed.
Lazard is advising DS Smith on the deal.