Paper-based packaging products manufacturer Smurfit Kappa Group (SKG) has agreed to acquire Fabrika Hartije d.o.o. Beograd (FHB) paper mill and Avala Ada d.o.o. Beograd corrugated facility, in Belgrade, Serbia, from Kappa Star Group.
Image: Smurfit Kappa to expand its Southeast European footprint with the acquisition of the largest integrated packaging business in Serbia. Photo: courtesy of Smurfit Kappa.
The paper mill holds one upgraded recycled containerboard machine with an existing capacity of 120,000 tons.
SKG said the paper mill has significant potential to drive synergies and further increase capacity with a limited investment of capital.
The corrugated plant, which manufactures both corrugated and laminated packaging, has a current production of about 110 million m².
SKG will buy which is claimed to be the largest integrated packaging business in Serbia for a consideration of €133m.
The acquisition of packaging business provides SKG the opportunity to further expand its Pan European footprint and enter into a new market.
It will extend SKG’s geographic footprint and offer full containerboard integration in the group’s packaging operations in Southeast Europe.
SKG said the agreement reflects a pre-synergy multiple of 7.6 times the antiicpated full year 2018 EBITDA. The group’s existing resources will be used to fund the consideration.
The transaction is expected to be completed by the end of 2018 subject to customary completion conditions.
Smurfit Kappa Group CEO Tony Smurfit said: “We are pleased to announce our agreement to acquire FHB and Avala Ada, which will be a cornerstone to the expansion of our business in Southeast Europe.
“We look forward to welcoming their experienced teams into the Smurfit Kappa Group, and we are confident their expertise and the high quality of the companies’ asset bases will provide us with an excellent platform to grow in the region and further strengthen our European offering for our new and existing customers.”
In its trading update for first nine months of 2018, SKG said Europe reported continued year-on-year EBITDA margin expansion with corrugated demand in line with expectations. Further corrugated price recovery is expected through the latter part of this year.
SKG completed the €460m purchase of Reparenco during the third quarter and the company said the integration is progressing well.