Smurfit Kappa buys two Serbian facilities

Smurfit Kappa Group has agreed to acquire the Fabrika Hartije d.o.o. Beograd (FHB) paper mill and the Avala Ada d.o.o. Beograd (Avala Ada) corrugated plant in Belgrade, for a consideration of €133m, from Kappa Star Group, it announced on Wednesday.

The FTSE 100 packaging conglomerate said the acquisition would expand its geographic footprint, and provide for full containerboard integration in its packaging operations in south east Europe.

It said FHB and Avala Ada were “well invested” businesses, with a “leading” market position in Serbia and solid positions in adjacent countries.

The containerboard mill held one recently-upgraded recycled containerboard machine with a current capacity of 120,000 tonnes, and “significant potential” to drive synergies and further increase capacity with a limited investment of capital.

Smurfit Kappa said the corrugated plant had a current production of approximately 110 million square metres, and produced both corrugated and laminated packaging.

Its customer base was predominantly composed of local and national customers, providing a “strong platform” for organic growth with Smurfit Kappa’s pan-European and multinational customers in the region.

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The transaction reflected a pre-synergy multiple of 7.6x the expected full-year 2018 EBITDA, with the consideration to be funded from the group's existing resources.

It said it expected that the transaction would complete by year-end, subject to customary completion conditions.

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“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 south east Europe,” said Smurfit Kappa chief executive officer Tony Smurfit.

“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.”