Sappi Limited announced today that it has concluded an agreement with AURELIUS Investment Lux One regarding the divesture of its Maastricht Mill in the Netherlands, its Stockstadt Mill in Germany and its Kirkniemi Mill in.
Steve Binnie, CEO of Sappi Limited commented: “We are very happy to have reached agreement with AURELIUS to take ownership of the three mills. Although they no longer fit in Sappi’s portfolio, they are strong assets with good people. The decision to sell these mills follows a detailed and thorough strategic review by Sappi in line with our group Thrive25 strategic focus. This includes reducing exposure to the graphic paper segment while expanding Sappi’s presence in segments including packaging and speciality papers, pulp and biomaterials. Recent investments across our South African, American and European operating businesses demonstrate this priority.”
Sappi received binding offers from several parties. Following due process, the board of Sappi agreed to proceed with the offer from AURELIUS, a pan-European multi-asset manager group. The sale will be subject to various standard suspensive conditions. The sale is expected to close in the first calendar quarter of 2023 once all these conditions have been fulfilled. A transitional services agreement will also be entered into to ensure a smooth transition of the businesses between the parties.
The enterprise value of the sale amounts to approximately €272 million. The consideration consists of cash proceeds and retained receivables (€212 million) as well as retained liabilities (€60 million). The proceeds will be used to reduce debt further and continue to increase Sappi’s focus on the identified growth segments. The net loss after tax attributable to the net assets of the three mills for the last twelve months ended 31 March 2022 was €6,5 million. Given the current volatile market conditions the EBITDA for the same period for the three mills was €58 million. As a comparison, the EBITDA for the pre-Covid period of twelve months to September 2019 for the three mills was €40 million.
Marco Eikelenboom, CEO of Sappi Europe explained: “Going forward Sappi’s focus in Europe as regards graphic paper will be on the stronger commercial print market. In addition, in the packaging and specialities segment, the European business will predominantly focus on the flexible packaging, functional papers, self-adhesives including glassine, labels as well as dye-sublimation categories. We believe this sale will help unlock potential value at each mill which would be best pursued by a new owner. Our strategic focus is on market segments not served by these mills.”
“The market for pulp and paper products is of particular interest to AURELIUS considering our industrial sector expertise. We combine a proven track record in complex carve-outs with a deep understanding of how to identify and unlock value creation potential. Given these key traits, this transaction offers ample opportunity to unleash the full potential of these production sites”, states Dr. Dirk Markus, Founding Partner of AURELIUS.
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