The total enterprise value of the transaction is approximately EUR 640 million
Stora Enso has signed an agreement to sell its merchant business Papyrus to Altor Fund II for an enterprise value of approximately EUR 640 million. The transaction consideration consists of approximately EUR 490 million in cash, approximately EUR 93 million of net liabilities assumed by the purchaser, and a vendor note of EUR 57 million. No material book-value gain or loss is expected to be recorded in connection with the transaction and the impact on Stora Enso’s annual earnings per share will also be non-material. The sale is expected to be finalised in the second quarter of 2008 subject to customary statutory approvals. The cash proceeds from the transaction will be used to pay down Stora Enso’s debt.
“Today we announce another concrete step in Stora Enso’s strategy of focusing the business portfolio of our Group. After successfully building up Papyrus and our Fine Paper business in the last few years, we believe it is critical that this channel can continue to develop independently – and in fact drive the consolidation of merchanting in Europe. We also believe that Altor will be a good owner for Papyrus to take this consolidation forward. The divestment includes a long-term supply agreement with Papyrus, which will maintain our strong business relationship while at the same time giving us independence in our dealings with all of our important distribution channels,” said Stora Enso CEO Jouko Karvinen.
“We are impressed how well Papyrus has developed over recent years, and it is a very strong platform for future growth and development. Altor’s goal is to continue to develop Papyrus into the leading and most customer-oriented merchant in Europe. This will benefit Papyrus’s customers, employees and strategic suppliers,” said Claes Ekström, Partner at Altor Equity Partners AB.
Mats Nordlander will continue as head of Papyrus for a transitional period following the closing of the transaction to ensure a smooth handover of the business to a new CEO. Mats Nordlander will during this time also remain head of Stora Enso’s Consumer Board Business Area and a member of the Group Executive Team.
Estimated financial effects of divestment of Papyrus on Stora Enso Group based on 2007 annual figures
| Sales reduction | EUR 1 525 million |
| EBITDA reduction excluding non-recurring items | EUR 66 million |
| EBIT reduction excluding non-recurring items | EUR 45 million |
| Capital employed reduction* | EUR 600 million |
| Debt/equity ratio | From 0.40 to 0.32 |
*Part of the capital employed reduction relates to a release in working capital for Stora Enso’s continuing operations which is expected to be fully realised by the end of the third quarter of 2008.
The segment Merchants will be reported as a discontinued operation in the interim report of the first quarter of 2008.
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