Stora Enso acquires De Jong Packaging Group for €1.02B in European expansion

09 Sep 2022 --- Stora Enso is acquiring Netherlands-based De Jong Packaging Group for €1.02 billion (US$1.02 billion). De Jong Packaging Group is one of the largest corrugated packaging producers in the Benelux countries and its product portfolio and geographic presence will “complement and enhance” Stora Enso’s offerings especially in fresh produce, e-commerce and industrial packaging.

The purchase is intended to advance Stora Enso’s strategic direction, accelerate revenue growth and build market share in renewable packaging in Europe.

The acquisition of De Jong Packaging Group will significantly strengthen Stora Enso’s European market presence in corrugated packaging and provide an entry into the Netherlands, Belgium, Germany and the UK.

“In line with our strategy, we are investing in growing our market share in renewable and circular packaging solutions. De Jong Packaging has a solid presence in the corrugated packaging sector and an impressive customer base. Acquiring their operations supports our future strategic direction to advance renewable packaging solutions within Europe,” says Annica Bresky, president and CEO at Stora Enso.

The move will drastically expand Stora Enso corrugated capacity.With the acquisition, Stora Enso’s packaging solutions division will increase its corrugated packaging capacity by approximately 1,200 million square meters to more than 2,000 million square meters, including De Jong Packaging Group’s ongoing expansion projects. This will secure a platform for continued growth in key markets, says the company.

Sale prices
Of the enterprise value of the transaction, €250 million (US$250 million) is International Financial Reporting Standards lease liabilities. The enterprise value corresponds to a multiple of 8.9 based on an adjusted EBITDA of €114 million (US$114 million) for 2022.

In 2025, when the ongoing expansion projects in packaging converting are ramped up, an additional EBITDA of €40 million (US$40 million) is estimated to be delivered, says Stora Enso. In the mid-term, after three years, the acquisition is expected to generate average annual synergies of €30 million (US$30 million) over the cycle, mainly through sourcing, containerboard integration optimization and commercial opportunities.

If Stora Enso decides to proceed with the currently studied conversion of the Langerbrugge paper production site in Belgium to containerboard, further synergies will be possible, says the company. In 2024, it may make a maximum additional earn-out payment in cash of €45 million, subject to De Jong Packaging Group achieving certain earnings thresholds.

De Jong Packaging Group’s full year 2022 sales is estimated at approximately €1 billion. acquisition will be financed through existing liquidity and bilateral loan arrangements. Stora Enso’s net debt to operational EBITDA ratio will increase by 0.4 to 1.4. Closure of the transaction is expected at the beginning of 2023, subject to employee consultation and regulatory approval. Stora Enso’s full year 2022 operational EBIT guidance remains unchanged.

Stora Enso on the move
The acquisition marks another move forward for Stora Enso after the company divested from Russia earlier this year following the invasion of Ukraine.

“We are excited about this acquisition. With our shared focus on agility and customer value, and with the excellent teams in both companies, we will create a strong platform for future growth,” says David Ekberg, EVP Packaging Solutions division at Stora Enso.

“De Jong Packaging Group has a solid track record of growth in corrugated packaging, which combined with our experience in innovative design, digital solutions and sustainability services, will enable us to strengthen our offering.”

Edited

By Louis Gore-Langton

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