Investment AB Kinnevik is to sell its Korsnäs Packaging subsidiary to Russian packaging group JSC Segezha Pulp and Paper Mill for €73.5M (SEK 693M). The transaction is subject to approval by competition authorities and is due to complete in the first half of 2006.
Europe's second largest manufacturer of industrial paper sacks, Korsnäs produces about 850M/year in facilities in nine countries. It has an annual turnover of approximately SEK1,200M and employs around 1,000 people. In recent years, the company is said to have has improved its profitability despite difficult market conditions in Western Europe and "successfully capitalized on the significant growth in Eastern Europe".
Karelia based, privately owned Segezha is an integrated pulp, paper and packaging business. It is Russia's largest producer of sack paper and industrial paper sacks, with significant export of sack and kraft paper. The combination of its paper production capabilities with Korsnäs Packaging's pan European market coverage is expected to provide an excellent industrial fit.
The deal will create a new number two player in the global paper sack market, with an annual production of some 1.1 billion sacks, combined with a sack paper capacity of about 300,000t.
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