Packaging / Advertising & Office

A new force in international trade! A few days ago, Stora Enso announced the acquisition of the Netherlands-based De Jong Packaging Group for an enterprise value of approximately EUR 1.02 billion. The acquisition will advance Stora Enso's strategic direction, accelerate revenue growth and gain a higher market share in the European renewable packaging segment. De Jong Packaging Group is one of the largest producers of corrugated packaging in the Benelux. Its product portfolio and geographic distribution will effectively complement and enhance Stora Enso's offerings, especially in fresh produce, e-commerce and industrial packaging.

The acquisition of De Jong Packaging will significantly strengthen Stora Enso's European market presence in corrugated packaging and expand access to the Netherlands, Belgium, Germany and the UK. With this acquisition, Stora Enso Packaging Solutions' corrugated packaging capacity will increase by approximately 1.2 billion square meters to more than 2 billion square meters, including the ongoing expansion project of De Jong Packaging Group. This will provide a platform for continued growth in key markets. A new force in international trade! The European corrugated packaging market is fragmented and local presence is the key to sustainable growth.

The transaction has an enterprise value of approximately EUR 1.02 billion, of which EUR 250 million is an IFRS lease liability. Based on 2022 adjusted EBITDA of 114 million euros, the enterprise value corresponds to 8.9 times. An additional €40 million in EBITDA is expected to be delivered by 2025 when the ongoing expansion project for packaging processing accelerates. In the medium term, after 3 years, the acquisition is expected to generate synergies of an average of EUR 30 million per annum over the full cycle, mainly through procurement, containerboard integration optimization and commercial opportunities.

A new force in international trade! Further synergies could arise if Stora Enso decides to continue the plan currently being studied to convert the Lange Bruges, Belgium paper production site to containerboard. Stora Enso may pay up to 45 million euros of additional earnings in cash in 2024, provided De Jong Packaging reaches certain profitability thresholds.

De Jong Packaging Group's full-year 2022 sales are estimated to be around 1 billion euros. The acquisition is expected to be accretive to earnings per share starting in the first year. The acquisition will be financed through existing liquidity and bilateral loan arrangements. Stora Enso's ratio of net debt to operating EBITDA will increase by 0.4-1.4. The transaction is expected to close in early 2023, subject to employee consultation and regulatory approval. Stora Enso's full-year 2022 operating EBIT guidance remains unchanged.

“In line with our strategy, we are investing to expand our market share in renewable and circular packaging solutions. De Jong Packaging has a solid presence and impressive customer base in the corrugated packaging industry. Acquiring their business supports Our future strategic direction for renewable packaging solutions in Europe," said Annika Breschi, President and CEO of Stora Enso.

"We are excited about this acquisition. With our shared focus on agility and customer value, and the excellent teams of both companies, we will create a strong platform for future growth. De Jong Packaging Group's strong presence in the corrugated box business There is a proven track record for growth. Packaging, combined with our experience in innovative design, digital solutions and sustainability services, will allow us to strengthen our offering,” said Executive Vice President, Packaging Solutions, Stora Enso David Eckberg said.

A new force in international trade! Henk de Jong, owner of De Jong Packaging Group, and Ed Schmidt, CEO, said: "We are proud of what De Jong Packaging Group has achieved and we are now looking forward to the next step in our company's growth. Dora Enso is well positioned to drive further growth based on our shared ambitions."

Founded in 1996, De Jong Packaging Group is one of the largest corrugated packaging manufacturers in the Benelux. The company specializes in the production of corrugated pallets and corrugated boxes, mainly for fresh produce, e-commerce and industry. De Jong Packaging is also actively engaged in containerboard production through the acquisition of the De Hopp paper mill in the Netherlands in 2021. De Jong Packaging Group has 17 factories in the Netherlands, Belgium, Germany and the United Kingdom. It has about 1,300 employees.

Prior to this, Stora Enso said that due to uncertainty in the Russian market, local ownership and operations would "provide its three corrugated packaging plants and their employees in Lukhovičić, Arzamas and Barabanovo". more sustainable long-term solutions". The three corrugated packaging plants produce corrugated packaging for the home improvement, confectionery and pet food sectors, with a combined production capacity of about 400 million square meters of corrugated boxes. The company declined to disclose the financial value of the deal, but said it would record an additional loss of 55 million euros, compared with a 35 million euro impairment already recorded in the first quarter.

In March of this year, the group has started the process of selling paper mills and may divest four of its five paper mills. According to the strategy of the paper and packaging giant, the paper business will no longer be a strategic growth area for the group, and the divestiture plan is in line with the long-term growth potential of its focus on renewable products such as packaging, construction solutions and innovative solutions for biomaterials The strategy is consistent. The plants expected to be divested are: Anjala in Finland, Hylte and Nymölla in Sweden, and Maxau in Germany. The company describes the facilities as "premium paper and pulp production sites with strong infrastructure and skilled and experienced staff".

A new force in international trade! Annika Bresky, President and CEO of Stora Enso, said: "By divesting the majority of our paper business and assets, we are able to focus more on our identified strategies for renewable packaging, construction solutions and biomaterial innovation. Growth areas. As we evaluate potential divestiture options, we seek new owners that provide a sustainable long-term future for these plants and the people who work there.”