The transaction includes the acquisition of CPG’s Carmignano and Condino Mills in Italy, its digital imaging business in Cham, Switzerland, as well as all brands and know-how.
Sappi chief executive Steve Binnie said the acquisition further strengthened Sappi’s speciality paper business in Europe and globally by combining Cham’s strong brands and assets with Sappi’s global reach.
“This transaction will increase profitability and unlock the significant growth and innovation potential inherent within the speciality paper market. I am very pleased that we have taken another signification step towards realising our Vision2020 goal,” Binnie said.
The acquisition would be funded through internal cash resources, and the transaction is conditional on the approval from certain competition authorities.
Sappi said it expected the acquisition to be completed during the first calendar quarter of 2018.
Sappi is a leading global producer of dissolving wood pulp, speciality and packaging papers, graphic paper and biomaterials. It operates in more than 150 countries.
This is not the first time in 2017 that Sappi had acquired a speciality paper business. In July, the group announced that it would bolster its packaging and speciality paper sector through the acquisition of the barrier film technology of Rockwell Solutions for an undisclosed amount.
As with the Rockwell Solutions acquisition, the new business will become a subsidiary of Sappi Europe.
Sappi Europe chief executive Berry Wiersum said the company was excited about the possibilities the transaction opened up for Sappi and Cham.
“The products and brands which have been acquired are an excellent complement to our market offering, enabling us to offer our existing, as well as new customers in Europe, North America and globally, a broader range of products, coupled with excellent customer service,” Wiersum said.
The group said the speciality paper business of CPG would continue to operate separately and independently from Sappi until clearances from the authorities were obtained.
In the results for the year to the end of September, the group reported an increase in earnings before interest, tax, depreciation and amortisation (Ebitda) fuelled by the growth of the dissolving wood pulp and speciality packaging businesses. The group’s Ebitda, excluding special items, was $785m, an increase of 6percent on the prior year’s $739m.
The results benefited by $20m from an additional accounting week in the first quarter compared with the prior year.
Operating profit, excluding special items for the year, was $526m, compared with $487m in the prior year, while net profit increased 6percent to $338m. The group’s net debt decreased to $1.32bn as a result of the cash generation.
Sappi shares fell 1.15percent to close at R94.75 on the JSE yesterday.
- BUSINESS REPORT