Wednesday 28 September 2016

Smurfit Kappa acquires two Brazilian rivals in €186m deal

Paul O'Donoghue

Published 04/01/2016 | 07:20

Tony Smurfit, left, who recently succeeded former CEO Gary McGann, right, pictured at Smurfit Kappa AGM
Tony Smurfit, left, who recently succeeded former CEO Gary McGann, right, pictured at Smurfit Kappa AGM

Irish packaging giant Smurfit Kappa has acquired two Brazilian integrated paper-based packaging businesses in a deal worth €186m.

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Both Industria de Embalagens Santana (‘INPA’) and Paema Embalagens (‘Paema’) are privately owned integrated packaging businesses.

The combined operations have three recycled containerboard mills with a total capacity of 210,000 tonnes and four corrugated facilities servicing the Northeast of Brazil, through the Rio and Sao Paulo regions and the south of the country.

The net assets of INPA and Paema at 30 September 2015 were €30m and €6m respectively.

The combined business employs over 1,700 people. Smurfit Kappa expects to generate synergies of approximately €6m to be delivered by the end of 2017. The company said this will be delivered primarily through “operational improvements and supply chain optimisation as the businesses are integrated”.

The transaction was completed at the end of December. Smurfit Kappa said it will be immediately earnings accretive.

The deal was funded from the group’s existing liquidity, made up of its existing cash resources and credit facilities.

Smurfit Kappa Group CEO Tony Smurfit said the acquisitions will extend the company's reach into “a strategically important market and build on our geographic diversity and strength”.

He added: “We look forward to welcoming the experienced teams into the Smurfit Kappa Group. We are confident that their expertise and the high quality of their asset base will provide us with a strong entry point into the Brazilian market and, as the leading pan-regional operator in Latin America, further strengthen our service offering to our existing international customers.”

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