Mondi buys rest of Egyptian paper firm’s shares

DUAL-LISTED packaging and paper group Mondi has announced that it had signed an agreement to acquire 100 percent of the outstanding shares in National Company for Paper Products and Import & Export S.A.E (NPP) in Egypt for a total consideration of €23.7 million (R356.21m) on a debt and cashfree basis.

The company said on Monday that it expected to conclude the transaction during the first half of the year.

Mondi said the purchase was subject to the customary closing conditions.

NPP is a privately owned industrial bags producer that operates a plant in Giza near Cairo and serves mostly regional customers.

Mondi said NPP generated revenues of €29m and adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of €5m for the year to the end of December 2017.

Erik Bouts, the chief executive: fibre packaging at Mondi Group, said: “The acquisition of NPP complements our network of plants in the growing Middle East region, and provides us with a leading position in Egypt.”

Mondi is the leading industrial bags producer in the Middle East, operating four plants in the region.

The group is a global player in packaging and paper business and is listed on the JSE and London Stock Exchange (LSE) with a market capitalisation of more than R168 billion. The group has a presence in over 30 countries.

In 2017, the group reported revenues of €7.1bn and a return on capital employed of 19.7 percent.

Mondi has been on an acquisition spree lately to increase its geographical reach.

In December, the group signed an agreement to acquire 100 percent of the outstanding shares in Powerflute Group Holdings Oy (Powerflute) for a total consideration of €365m on an enterprise value basis.

Capacity Powerflute is a division of Nordic Packaging and Container Holdings (NPAC Holdings).

Powerflute operates an integrated pulp and paper mill in Kuopio, Finland, with an annual production capacity of 285 000 tons of high-performance semi-chemical fluting.

In February last year, it acquired 100 percent of Excelsior Technologies (Excelsior) from funds managed by Endless LLP and other minority shareholders, for a total consideration of €38m on a debt and cashfree basis.

Excelsior is a vertically integrated producer of innovative flexible packaging solutions, located in Deeside, Northern Wales and Lancashire.

Cobus Cilliers, an investment analyst at 36ONE Asset Management, said the acquisition was made at a good but low enterprise value/earnings before interest, tax, depreciation and amortisation multiple.

“Overall, it is not significant for Mondi at a group level,” Cilliers said.

Mondi shares rose 5.28 percent to close at R363.96 on the JSE on Monday.