Smurfit Kappa acquires Brazilian companies
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 an SKG news release.
SKG 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 employ 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.
A programme known as IMPACTPapeRec started 1 February 2016 and will continue for a period of two years. The project is financed by the European Union Horizon 2020 programme, having evolved from a commitment on separate paper collection in the European Innovation Partnership on Raw Materials.
Thirty-six delegates from eight countries representing research institutes, municipalities, the paper industry and NGOs (nongovernmental organisations) met in Valencia, Spain, to kick off the project and to plan upcoming activities.
The project focuses on countries with below-average paper recycling rates, such as Bulgaria, Poland and Romania, as well as countries where paper from households, small shops and offices often is collected in a commingled stream with other recyclables, as in France and the United Kingdom.
IMPACTPapeRec consists of a consortium of 19 partners, including CEPI (the Confederation of European Paper Industries), from eight countries—Austria, Belgium, Bulgaria, France, Germany, Poland, Romania and Spain. The group says it aims to put Europe at the forefront of paper for recycling collection by providing an innovative and common knowledge platform.