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DS Smith has agreed to divest its De Hoop paper mill in the Netherlands to De Jong Packaging for €50 million, as it continues to shift its focus on light-weight fibre-based packaging. 

The current mill produces 370,000 tonnes of mainly heavier grades of recycled paper per year.

The sale forms part of DS Smith’s strategy to have a ‘short paper’ position in Northern Europe, where it says there is a greater amount of external capacity available to the group.

It marks a step forward in its plan to align its internal paper production with its priorities in light-weight fibre-based packaging solutions for FMCG and ecommerce customers.

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.

Miles Roberts, DS Smith CEO, said: "We are pleased to have reached this agreement for the De Hoop Paper mill. 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.”

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.