The European Commission competition authority has approved the previously announced acquisition of Swedish group SCA’s subsidiary SCA Packaging (excluding its two kraftliner mills) by UK-based DS Smith for about EUR1.6bn.

According to DS Smith, the clearance requires the company to divest three sites after the acquisition, currently representing about 1%of the enlarged group profit.

The commission said that the clearance is conditional on the companies divesting a number of production plants in the UK and France.

DS Smith chairman Gareth Davis said the acquisition is an opportunity, offering the combination of a clear strategic rationale, potentially good financial returns and a step change in the company's capabilities to deliver the recycled packaging service to its customers.

"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," Davis added.