Ireland-based Smurfit Kappa Group (SKG) has acquired two Brazilian integrated paper-based packaging businesses, Industria de Embalagens Santana (INPA) and Paema Embalagens, at a total cost of approximately €186 million ($200.8 million).
Both INPA and Paema had been privately owned integrated packaging businesses. The combined operations have three recycled-content containerboard mills with a total capacity of 210,000 tonnes and four corrugated facilities servicing northeast Brazil in a region that runs through the Rio de Janeiro and Sao Paulo metropolitan areas and the south of the country. The net assets of INPA and Paema as of September 2015 were €30 million ($32.4 million) and €6 million ($6.5 million) respectively, according to a Smurfit Kappa news release.
Smurfit Kappa consumes more than 5.3 million tonnes of recovered fibre worldwide each year at its containerboard mills and other facilities, according to a review of major scrap paper consumers conducted by Recycling Today.
“We are pleased to announce the acquisition of INPA and Paema, which will extend our reach into a strategically important market and build on our geographic diversity and strength,” says Tony Smurfit, SKG CEO. “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.”
The combined Brazilian businesses employs more than 1,700 people.
SKG says it “expects to generate synergies of approximately €6 million ($6.5 million) to be delivered by the end of 2017, primarily through operational improvements and supply chain optimisation as the businesses are integrated.”
The transaction was completed at the end of December 2015 and will be immediately earnings accretive, SKG says. The acquisition was funded from SKG’s existing liquidity, comprising primarily cash resources together with the existing committed credit facilities, the company says.