Mondi Group, the paper and packing company, has bought a controlling stake in Nordenia, a supplier of consumer packaging and hygiene components.
Mondi has agreed to acquire 93.4% of the outstanding share capital of Nordenia International for a total cash consideration of €240m, on top of which Mondi will also assume €398m of Nordenia's debt. The consideration plus assumed debt places a total value on the company of €655m, which equates to 6.6 times Nordenia's 2011 earnings before interest, tax, depreciation and amortisation and 9.3 times 2011 earnings before interest and tax.
Mondi is funding the transaction through a new €250m two-year committed bank debt facility.
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Nordenia has 12 fully invested operating facilities located in seven countries across Europe, North America and Asia. An additional wholly-owned greenfield plant is currently being constructed in China and is expected to begin operating in early 2014. The acquisition is expected to complete in the fourth quarter of 2012.
The combination of Mondi and Nordenia is expected to result in pre-tax cost synergies in excess of €15m per annum by 2014. The acquisition is expected to enhance Mondi's underlying earnings immediately, with the group predicting a double digit percentage underlying earnings boost by 2014 once synergy benefits feed through.
Following the completion of the acquisition, Mondi Group will reorganise its Europe & International Division into four businesses: Uncoated Fine Paper;Packaging Papers; Fibre Packaging; Consumer Packaging. Nordenia will form part of the Consumer Packaging business, which will be led by Ralph Landwehr, the Chief Executive Officer of Nordenia.
Mondi said it expects to capitalise on Nordenia's leading technology, product portfolio, customer know-how and manufacturing capability to expand further in these regions.
Following the acquisition Mondi will retain undrawn committed bank facilities of more than €500m.
Mondi's share price fell 0.27% to 557.50p by 09:01.
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