Smurfit Kappa acquires Dutch paper and recycling business in US$538 million deal
25 May 2018 --- Corrugated packaging giant, Smurfit Kappa, has announced the acquisition of Reparenco, a privately owned paper and recycling business in the Netherlands, for a cash consideration of approximately €460 million (US$538 million), following a competitive process.
Smurfit Kappa aims to strengthen their integrated business through the acquisition of the 675,000 ton paper mill in the Netherlands and accelerate their strategic objectives under its Medium Term Plan. Reparenco’s strong strategic fit with Smurfit Kappa’s existing European businesses is expected to deliver significant synergies in the near-term in a number of areas, including increased integration of containerboard and the recycling operations into the Group.
Smurfit Kappa CEO, Tony Smurfit, comments: “We are pleased to announce our agreement to acquire Reparenco, successfully concluding a process which began on February 1st this year. The acquisition of Reparenco is complementary with our existing business; strengthens our integrated business model, and accelerates a central element of our medium-term plan.”
“We welcome all the Reparenco employees to Smurfit Kappa. We believe there is a strong cultural fit between our businesses and that, together, we will generate value in the short, medium and long term for all our stakeholders.”
Reparenco operates a two machine paper mill in the Netherlands with a capacity of 675,000 tons together with a 750,000 tone recovered fiber operation. Reparenco employs 315 people with Gross Assets of €189 million (US$221 million) and generated EBITDA of €41 million (US$48 million) in the 12 months to April 2018, during which time the business continued to ramp up production.
The acquisition represents a transaction multiple, pre-synergies, of 6.4x the expected full year 2018 EBITDA for Reparenco of €72 million (US$84 million).
The cash consideration will be funded from the Group's existing resources. It is expected that the Transaction will complete within four to six weeks subject to customary completion conditions and adjustments and regulatory approval.
Transaction Highlights
• Accelerates the Group’s strategic objectives under its Medium Term Plan;
• Delivers EBITDA day 1 with no start-up risk;
• Acquisition of a paper mill with a capacity of 675,000 tons in SKG’s core operating region in Europe;
• Mill comprises two machines with a capacity of 405,000 tons of recycled containerboard and 270,000 tons of graphic paper (with the potential for conversion to containerboard);
• Mill includes a 750,000 tone recovered fiber operation; and,
• Strengthens SKG’s paper integration – the Group is currently short 700,000 tons of recycled containerboard in Europe.
Smurfit Kappa Group is one of the world's largest integrated manufacturers of paper-based packaging products with operations in Europe and the Americas.
The manufacturer has itself been recently subject to a potential takeover bid from International Paper, rejecting two approaches which were deemed to undervalue the company’s “true intrinsic worth.” Smurfit Kappa has since welcomed the Irish Takeover Panel’s June deadline for a proposed International Paper takeover bid, stating that it would provide certainty to the company and its stakeholders. International Paper has confirmed that it will not proceed with a further offer unless it is recommended by the Smurfit Kappa Board.
