Segezhsky pulp-and-paper mill acquired AB Kinnevik subsidiary for Euro 73.5 million

Dec 15, 2005. /Lesprom Network/. Investment AB Kinnevik announced on Thursday that it has entered into an agreement to sell its subsidiary Korsnas Packaging to the Russian packaging group Segezhsky pulp-and-paper mill for a total consideration of Euro 73.5 million in cash on an enterprise value basis. Korsnas Packaging is Europe's second largest manufacturer of industrial paper sacks. It produces about 850 million paper sacks annually in high-quality production facilities in nine countries. In recent years Korsnas Packaging has improved its profitability despite difficult market conditions in Western Europe and successfully capitalized on the significant growth in Eastern Europe. Korsnas Packaging has an annual turnover of approximately SEK 1 200 million (Euro 127.3 million) and employs around 1 000 people. Based in Karelia, Russia, privately owned Segezhsky PPM 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 Segezhsky paper production capabilities with Korsnas Packaging's pan-European market coverage provides an excellent industrial fit between the two companies. The transaction creates a new №2 player in the global paper sack market, with an annual production of some 1.1 billion industrial paper sacks, combined with a sack paper capacity of about 300 000 tonnes. It also strengthens Segezhsky and Korsnas Packaging's already strong position in the fast growing Eastern European, CIS and Russian markets and enables a more efficient utilization of the production units. The transaction is subject to approval by competition authorities and is expected to be finalised in the first half of 2006. Alfred Berg ABN AMRO acted as financial advisor to Kinnevik.