(Reuters) - DS Smith Plc (L:SMDS) agreed to buy Spanish company Grupo Lantero's corrugated products business, a move that would help the recycled packaging maker significantly expand its market share in Spain.
The 190-million-euro (£136 million) purchase, including assumed debt, would deliver a return on invested capital in the second year of ownership, DS Smith said.
Shares in the company were up 3.3 percent at 388.5 pence in early trading on Thursday on the London Stock Exchange. They were among the top percentage gainers on the FTSE-250 midcap index (FTMC)
DS Smith said the deal, which includes several operations in which it currently holds a minority interest, would give it an about 10 percent share of the Spanish cardboard corrugated packaging market.
"This acquisition significantly strengthens our operations in Spain, an important and growing market for corrugated packaging," the company said in a statement.
The deal, albeit much larger, builds on DS Smith's acquisition of Spanish corrugated board producer Andopak for 35 million pounds in November.
Grupo Lantero's corrugated products business has a strong focus on the FMCG sector and operates out of seven sites across Spain.
DS Smith, whose customers include Procter & Gamble Co (N:PG), Nestle SA (VX:NESN) and Unilever Plc (L:ULVR), also reported a pretax profit of 200 million pounds for the year ended April 30, up 20 percent from a year earlier.
However, reported revenue fell 5 percent to 3.82 billion pounds, mainly due to the impact of the weaker euro. On a constant currency basis, revenue rose 1 percent.
The company, which specialises in fully recyclable corrugated packaging, also said strong volume growth and a rise in margins had prompted it to increase its medium-term margin target by 100 basis points.