SCA expands packaging operations, acquires the Danish company Danapak
SCA has acquired Danapak Papemballage, the third-largest Danish corrugated
board company, for DKK 530 M on a debt-free basis (SEK 636 M). The majority
owner of the Danapak Group is MD Foods, the Danish dairy cooperative. The
agreement includes a clause entitling the seller to a supplementary
consideration in a maximum amount of DKK 15 M in the event that the company's
earnings for 1999 significantly exceed its earnings for 1998. The purchase
price corresponds to 6.5 times operating surplus (EBITD) and 8.3 times
operating profit (EBIT) based on 1998 year-end earnings.
The acquisition is calculated to exceed SCA's weighted capital costs by
slightly more than 30% (CVA index 1.30). During 1999, the acquired operations
are expected to contribute about SEK 0.20 in earnings per share. The synergies
in this acquisition are largely attributable to improved raw material
integration. The operations will be reported in SCA's consolidated accounts as
of 1 January 1999.
Danapak holds a market share of 17% of one of the most consolidated markets in
Europe. The company produces about 100 million m of corrugated board
annually, with sales of about SEK 650 M and 500 employees. Previously, SCA had
only exported products to Denmark and is now gaining a strong local presence
as a result of the acquisition.
Corrugated board production is centered in Grenå. Converting to finished
packaging is carried in Grenå and at two sheet plants, in Haslev and Horning.
As with the earlier acquisition of Rexam Corrugated Packaging, the purchase is
in-line with SCA's intentions to expand its packaging operations. This will be
accomplished through selective acquisitions aimed at highly profitable
segments and by increasing market share in Europe to at least 20% (currently
14%) and thereby contributing to a consolidation of the corrugated board
Danapak has developed a number of innovative packaging solutions, among other
reasons as a result of the successful cooperation with such customers as MD
Foods, and has largely focused its production on high-quality products. These
include compact E/F-fluting packaging and packaging coated to become water-
and oil-resistant. The company has also developed advanced graphic solutions.
SCA and MD Foods are in agreement regarding continued development of
cooperation to benefit both parties.
SCA Packaging is a leading transport packaging company in Europe with sales of
about SEK 15 billion, corrugated board production of about 3.5 billion m and
liner production (kraftliner, testliner and fluting) of approximately 2.4
Stockholm, 4 February 1999
SVENSKA CELLULOSA AKTIEBOLAGET SCA
For further information please contact:
Sverker Martin-Löf, President and CEO. Phone +46 8-788 51 51 or
Colin J Williams, President, SCA Packaging. Phone +32 2 718 37 30 or
Sten Lindholm, Senior Vice President, Corporate Communications. Phone +46 8-
788 51 62
SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ)
Box 7827, SE-103 97 STOCKHOLM, Sweden
Tel +46 8-788 51 00, Fax +46 8-678 81 30
Please visit http://www.bit.se for further information
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