Stora Enso Expands Renewable Packaging Business to Pakistan
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Stora Enso, Finland, and Packages Ltd. of Pakistan have established a joint venture called Bulleh Shah Packaging. Stora Enso's initial shareholding will be 35% with a commitment to increase the shareholding at the agreed value to 50% at a later stage subject to certain conditions being met. The joint venture will include the operations of the Kasur mill and Karachi plant in Pakistan currently owned by Packages Ltd.
The joint venture will provide packaging products to key local and international customers in the fast-growing Pakistani market. The joint venture will employ about 950 people and its sales are forecast to be $130 million (EUR 99 million) in 2012.
The agreed value for 100% of the joint-venture company is approximately $108 million (EUR 83 million) on a cash and debt-free basis. The total consideration can be up to $125 million (EUR 96 million), including an additional maximum performance compensation based on the financial results of the second half of 2012 and the first half of 2013. As part of the agreement, both parties are committed to a substantial $135 million (EUR 103 million) investment program during 2013 and 2014 to develop the business further.
"This is an example of Stora Enso's investments in value-creating growth markets. The Pakistani market, with growing demand for packaging products and paperboard, offers an attractive growth opportunity for us and the joint venture will enable us to increase our capability to serve our key customers," said Mats Nordlander, EVP, Renewable Packaging Business Area.
The joint-venture transaction is expected to be completed during the first quarter of 2013, subject to competition and regulatory approval and other customary transaction conditions.
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