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Management Side
Ahlstrom's Label and Processing Area to be Combined
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Helsinki, Finland 28 August 2012 -- Ahlstrom continues to focus its business operations and will demerge the Label and Processing business area, which will be combined with Munksjö AB to form a new global leader in specialty papers.

The new company, to be named Munksjö Corporation (in Finnish Munksjö Oyj), is expected to be publicly listed on NASDAQ OMX Helsinki during Q1/2013.

The transaction will allow Ahlstrom to focus on high performance materials that purify, protect and provide surface and structure to customers' products.

Ahlstrom and Munksjö AB estimate the new company to reach annual synergies of about EUR 25-30 million once fully implemented.

After the completion of the transaction, Ahlstrom's shareholders will own shares in two focused listed companies, which is expected to increase shareholder value over time.

Ahlstrom will become a shareholder in the new company with a shareholding of approximately 15 percent.

Ahlstrom Corporation has today signed an agreement with EQT, the principal owner of Munksjö AB, to combine its Label and Processing business area with Munksjö AB to form a global leader in specialty papers through two partial demergers: one consisting of the Label and Processing operations in Europe (LP Europe) and one in Brazil (Coated Specialties). The new company will be called Munksjö Corporation (in Finnish Munksjö Oyj) and its shares will be listed on NASDAQ OMX Helsinki. The transaction enables Ahlstrom to focus exclusively on its value-added business areas: Building and Energy, Filtration and Food and Medical. Meanwhile, the Label and Processing business area can be further developed together with Munksjö.

"During the past three years, Ahlstrom has systematically executed its strategy towards becoming a focused high performance materials company. This transaction of combining the Label and Processing business area with Munksjö is the most significant step in our strategy execution. It allows us to concentrate our resources to the areas where we see the most attractive value-add and growth opportunities," says Jan Lång, President and CEO of Ahlstrom.

"The essence of our strategy is that our high performance materials protect people, purify air and liquids and provide surface and structure to our customers' products. In addition to reinforcing our global leadership in Filtration, we seek growth opportunities in high performance materials for building, food packaging and medical applications," Lång continues.

"We expect this transaction to enhance value for Ahlstrom's shareholders through ownership in two focused publicly listed companies that are global leaders in their respective fields," concludes Lång.

The other major step in the process of Ahlstrom focusing its business operations was the divestment of the Home and Personal business area to Suominen Corporation in 2011. Ahlstrom expects the future growth to be realized through organic growth as well as acquisitions and partnerships in the three business areas.

Execution of the transaction

The planned transaction will be executed through two partial demergers. In the first phase, Ahlstrom and EQT, the principal owner of Munksjö AB, will establish a new company to be named Munksjö Corporation (in Finnish Munksjö Oyj) to acquire the operations of Munksjö AB in exchange for new shares in Munksjö Corporation. The European operations of Ahlstrom's Label and Processing business area are then separated through a partial demerger and transferred into Munksjö Corporation in exchange for shares in Munksjö Corporation to be distributed to Ahlstrom's shareholders.

Prior to the public listing of the new company, new shares in Munksjö Corporation worth approximately EUR 100 million will be offered in a directed share issue to selected institutional investors, including Ahlstrom, Varma, Ilmarinen and EQT, to strengthen the capital structure of the new company. The investors are fully committed to subscribe for the shares in the directed issue. The first phase is expected to be completed during the first quarter of 2013.

In the second phase, following the public listing of the new company, Coated Specialties, the Brazilian part of Ahlstrom's Label and Processing business area, will be separated through another partial demerger into Munksjö Corporation. This is to allow enough time for receiving all the necessary regulatory approvals in Brazil. These approvals are not a prerequisite for completing the first phase and the public listing of Munksjö Corporation. The second phase is expected to be completed by the end of the second quarter of 2013.

Transaction rationale

Ahlstrom estimates that the combination of the Label and Processing business area and Munksjö AB will create more value for Ahlstrom's current shareholders over the long term than what Label and Processing could create as part of Ahlstrom. Moreover, the transaction allows Ahlstrom to focus solely on the selected value-added businesses within the Building and Energy, Filtration and Food and Medical business areas.

There is a clear strategic fit between the Label and Processing business area and Munksjö AB with specialty papers as the core business, serving as a platform for continued growth. The transaction is also expected to create synergies in the range of EUR 25-30 million once the transaction is fully implemented, mainly relating to purchasing, production, pulp, logistics and sales. As part of the synergy plan, the parties will establish joint sourcing activities. Of the identified synergies, 60 percent are expected to be reached within one year following the closing of the two partial demergers and the rest during the next 2-3 years.

Munksjö Corporation will be one of the world's largest focused specialty paper companies with a leading market position in attractive market segments. The transaction will also enable the Label and Processing business area to gain a position that could not be achieved within Ahlstrom. Long customer relationships, deep know-how of customers' needs and high technical expertise within production and product development contribute to the sustainability of these leading market positions.

Ownership of the new company

Following the transaction through two partial demergers, Ahlstrom's shareholders will own shares in two publicly traded companies that are focused and global leaders in their respective fields. After the first phase, Ahlstrom's shareholders will hold approximately 33 percent of the shares in the new company and Munksjö AB's shareholders 39 percent. The remainder of the shares will be owned by new shareholders, including Ahlstrom Corporation, Varma and Ilmarinen.

Trading of the shares of the new company is expected to start during the first quarter of 2013 on NASDAQ OMX Helsinki. This is prior to the demerger of the Brazilian operations of the Label and Processing business area.

After the second phase, Ahlstrom's shareholders will hold approximately 50 percent of the shares in the new company and Munksjö AB's shareholders 29 percent. Other investors, including Ahlstrom Corporation, will hold the remaining 21 percent of the shares.

Ahlstrom will receive approximately EUR 150 million in cash related to a net debt transfer as part of the agreement. Ahlstrom is committed to use a total of EUR 62.5 million to subscribe for shares in Munksjö Corporation and consequently Ahlstrom's net debt will be reduced by approximately EUR 87 million. Ahlstrom's shareholding in the new company will be approximately 15 percent following the second phase of the transaction.

Munksjö Corporation, the new company to operate the combined Label and Processing business and Munksjö AB

In 2011, the Label and Processing business (the combined LP Europe and Coated Specialties) had net sales of EUR 681 million[1] and an EBITDA (excluding non-recurring items) margin of 5.11] percent. The business area employs approximately 1,500 people and has six plants in Europe and South America. Its main products include release liners, self-adhesive labels, base paper for metalized labels, flexible packaging papers, poster papers, decor papers, and abrasive backings. The plants that will be part of the transaction include Osnabrück in Germany; La Gere, Rottersac and Stenay in France, the Label and Processing operations in Turin, Italy, as well as the Coated Specialties plant in Jacarei, Brazil.

Munksjö AB is a Swedish specialty papers company currently with the private equity firm EQT as its main owner. The net sales of Munksjö on a pro forma basis totaled approximately EUR 645 million[2] in 2011, and its EBITDA on a pro forma basis (excluding non-recurring items) margin was 7.6[2] percent. The company employs about 1,800 people and has ten plants in Europe and Asia. Its main products include decor papers, abrasive backings, electrotechnical papers, and long-fiber specialty pulp.

The net sales of the new company (Label and Processing and Munksjö AB combined) would have totaled about EUR 1.3 billion in 2011. It will employ approximately 3,300 people at 16 production sites, including 14 in Europe, one in Brazil and one in China. The research and development resources will be located in France.

Jan Åström, President & CEO of Munksjö AB, will become the President & CEO of the new company. The parties have agreed that the Chairman of the intermediate Board of Directors of Munksjö Corporation will be appointed by Ahlstrom. Peter Seligson has been appointed as an intermediate Chairman of Munksjö Corporation. The head office of Munksjö Corporation will be located in Stockholm, and its shares will be listed on the NASDAQ OMX Helsinki.

Following the completion of the transaction, the current Ahlstrom's site in Turin will be jointly operated by Ahlstrom and Munksjö Corporation. The Osnabruck plant, which will be part of the transaction, will continue to produce wallcovering materials for Ahlstrom.

Transaction conditions and timeline

The two partial demergers in the transaction require the approval of the Extraordinary Shareholders' Meeting of Ahlstrom. Ahlstrom will publish a separate invitation to the Extraordinary Shareholders' Meeting to be held in November 2012. The first phase of the transaction is anticipated to be completed during the first quarter of 2013 and is subject to customary completion terms, such as merger clearances from relevant competition authorities. The trading of shares of Munksjö Corporation is also estimated to start during the first quarter of 2013. The completion of the second phase is not a condition for the completion of the first phase of the transaction.

Further information about the transaction and the new company will be available in a prospectus to be published by Munksjö Corporation approximately one week prior to the Extraordinary Shareholders' Meeting.

Following the approval by the Extraordinary Shareholders' Meeting, the Label and Processing business area will be classified as assets held for distribution to owners and reported separately as discontinued operations. Ahlstrom will then update its outlook on net sales and operating profit excluding non-recurring items for 2012.

Ahlstrom in brief

Ahlstrom is a high performance materials company, partnering with leading businesses around the world to help them stay ahead. Our products are used in a large variety of everyday applications, such as filters, medical gowns and drapes, wallcoverings, flooring, labels and food packaging. We have a leading market position in the businesses in which we operate. Our 5,200 employees serve customers in 28 countries on six continents. In 2011, Ahlstrom's net sales amounted to EUR 1.6 billion. The company's share is quoted on the NASDAQ OMX Helsinki. More information is available at www.ahlstrom.com.

Munksjö in brief

Munksjö is one of Europe's leading players in specialty paper and specialty pulp. The Group develops, manufactures, markets and sells high-quality and value-creating specialty papers such as Decor papers used in the manufacture of for example furniture, kitchen interiors and laminate flooring. Products used in industrial applications include Abrasive backings and Electrotechnical papers for the insulation of high-voltage cables and transformers. Customer relationships, high technical competence, production know-how and the capacity for product development have contributed to Munksjö's strong market positions. Munksjö has production facilities in France, China, Germany, Spain and Sweden and employs approximately 1,800. More information is available at www.munksjo.com

Disclaimer
This document may not be distributed in or into Australia, Canada, the Hong Kong special administrative region of the People's Republic of China, Japan, New Zealand, South Africa or the United States.

The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.

This document is not an offer for sale of securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Ahlstrom Corporation, Munksjö AB and Munksjö Corporation have not registered, and do not intend to register, any offering of the Munksjö shares in the United States. There will be no public offering of the Munksjö shares in the United States.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (iv) persons who are members or creditors of the company to which this communication relates, falling within article 43(2) of the Order (all such persons in (i), (ii) (iii) and (iv) above together being referred to as "relevant persons"). Any investment activity to which this document relates will be only available to and will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
 
 

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