Johannesburg - Paper and packaging firm Mondi said on Tuesday it will buy the US bags and kraft paper business of Graphic Packaging International for $105 million as it seeks to grow its presence in the world's largest economy.

Mondi, a South African company also listed in London, said the acquisition will be on a debt and cash-free basis and would be funded from its existing resources.

“The combination of the business with Mondi's existing network will create a leading bags player in North America and expand the group's growing global footprint in this market,” chief executive David Hathorn said in a statement.

Kraft paper refers to a type of paper often used in packaging.

Graphic Packaging International is a subsidiary of Graphic Packaging Holding. - Reuters