The two machines, with a combined capacity of 300,000 tonnes, are said to have generated sales in 2011 reaching €220m (SEK 2bn). The sack and kraft paper products manufactured at the sites are used extensively in the food sectors as well as in retail, construction and other industries.
Pulp exposure reduced
The deal, expected to be completed in the second quarter of 2012, has been hailed by the company of securing it a number of strategic advantages in terms of raw material pricing, packaging offerings and foreign currency.
“The acquisition strengthens our offering in packaging paper and provides us with a strong platform for the further development of smarter packaging solutions,” said Per Lindberg, president and CEO of Billerud. “Also, the acquisition sharply reduces our pulp exposure as we will purchase an annual pulp volume corresponding to around 85% of Billerud's present pulp sales volume. We also reduce our currency exposure.”
Utility agreement
As part of the takeover, the firm has signed a long-term agreement which will see UPM deliver key production inputs such as pulp, steam and electricity.
Billerud will buy an annual volume of pulp from UPM equivalent to 85% of its yearly needs. While the price will be a market one, the bulk purchase should insulate it from fluctuations in pulp prices and reduce its exposure to the pulp market, it said.
“We see great potential in the acquired business as it will now be integrated in a business focused on packaging paper,” said Lindberg.
One-off costs for the buyout will run to €2.5m in the current financial year, with Lindberg saying expected annual synergies would amount to SEK30m.
