Smurfit Kappa Group, Dublin, Ireland, has agreed to acquire Texas, USA-based Bates Container, a non-integrated corrugated packaging manufacturer. Bates employs 320 people and a substantial element of its approximately 135,000 tons of containerboard requirement will be supplied by Smurfit Kappa Orange County (SKOC). SKOC produces 350,000 tpy of recycled containerboard.

 

Smurfit Kappa will pay an initial consideration of $150 million with a deferred payment of $7.5 million. The acquisition is expected to complete in the fourth quarter of this year, subject to customary regulatory approval, with funding from existing cash reserves.

 

The pro forma EBITDA for Bates is expected to be $18.5 million and the Group has identified synergies of $11.5 million, which it expects to deliver within 24 months of completion. These synergies will be primarily delivered through the vertical integration of Bates, with additional savings expected through a range of operational efficiency measures.