Kappa Holdings, the vehicle formed and jointly owned by private equity firms Cinven and CVC Capital Partners, has acquired AssiDomän Corrigated and Containerboard for E1.1bn on a debt-free basis. The newly acquired business will be integrated in time with Kappa Packaging, the paper recycling operation.
Of the price that the UK private equity houses are paying for the acquisition E38.2m represents tax debts, and E512.6m net interest-bearing liabilities. In 2000 Corrigated and Containerboard had net revenues of E1.36bn and operating income (EBIT) of E116.22m.
E115m of mezzanine capital has been underwritten by Barclays Capital, eFinancialNews reports. Deutsche Bank and Merrill Lynch are arranging a E750m tranche of senior debt.
The deal is subject to the European Commission’s approval, which is expected to be granted within the first six months of this year. Explaining the rationale of the disposal, Gunnar Palme, CEO of AssiDomän, said: “The sale is in line with the strategy adopted more than a year ago, that is to create long-term competitive structures for the business at the same time as we are making visible and creating shareholder-value. Combined, AssiDomän’s and Kappa’s operations will be a considerably stronger player in the European market for corrugated and containerboard.”
Frits Beurskens, president of Kappa Packaging, said: “Kappa Packaging and AssiDomän Corrugated & Containerboard are extremely complementary with minimal geographical overlap. The businesses will have a strong balanced portfolio of virgin and recycled fibre products.” Kappa Packaging is one of Europe’s largest companies operating in the production, development and sale of recycled paper, solid board, corrugated and solid board packaging and graphic and speciality board. In 1998 CVC and Cinven took the business private through a leveraged buy-out. To finance the original acquisition, Sfr1.2bn (E780m) worth of high yield bonds were issued at the time. After purchasing Kappa Holdings, the private equity investors announced plans to expand the business by way of a buy-and-build strategy.