Smurfit Kappa Group to acquire Orange County Container Group for $340 million

Sep 24, 2012. /Lesprom Network/. Smurfit Kappa Group plc (‘SKG’) has agreed to acquire Orange County Container Group (“OCCG”) for a total cash consideration of $340 million, as the company said in the press release received by Lesprom Network. OCCG is a private corrugated and containerboard manufacturer with operations in Northern Mexico and the Southern United States. OCCG employs 2,800 people (2,000 of whom are employed in Mexico), and is expected to generate $53 million of EBITDA for the full year 2012. OCCG’s strong strategic fit with SKG’s existing businesses is expected to deliver at least $14 million of synergies by the end of year 2. The $340 million cash consideration will be funded from the Group's existing cash resources. It is anticipated that the Transaction will complete in the 4Q 2012 subject to customary completion conditions and regulatory approval, and is expected to be EPS accretive on completion. Gary McGann, Smurfit Kappa Group CEO, said: "We are pleased to announce our agreement to acquire Orange County Container Group. We look forward to welcoming the excellent team from OCCG into the Smurfit Kappa Group and we are confident that their skills and expertise will complement those of our colleagues in the relevant markets. The acquisition delivers immediate earnings growth for SKG and significantly strengthens our existing position in the Mexican market. The continued strength of our operating performance and consequent net debt reduction has increased the range of strategic and financial options for the Group. The acquisition of OCCG provides a complementary portfolio of well-invested assets and quality people. This transaction further increases the contribution of our existing successful Latin American business; providing us with a very significant position within the key Maquiladora trading region and substantially strengthening our position in the higher growth Mexican market. SKG has a proven track record of identifying, acquiring and integrating businesses. This Transaction creates synergies for the Group delivering value and earnings growth for our shareholders.” OCCG is a leading integrated packaging manufacturer operating in Northern Mexico and the Southern United States. OCCG produces, markets and sells high graphics and conventional corrugated containers, as well as point-of-purchase displays. The Business also produces 290,000 tonnes of recycled containerboard on two paper machines in Dallas. It operates seven wholly owned recycling centres in Texas, Oklahoma and Arkansas, which is a significant strategic resource and provides security of supply of recovered paper for the mill and of containerboard for the corrugated operations. Smurfit Kappa Group is acquiring OCCG and its assets including its production facilities; recycling centres; brands, trademarks; and customer contracts. The employees in the Business will transfer to the Group. The Group will not assume tax or pension liabilities or financial indebtedness. The consideration is $340 million payable in cash on completion. Smurfit Kappa Group is a world leader in paper-based packaging with operations in Europe and Latin America.