Bong Ljungdahl to Merge with Hamelin’s Envelope Division
Sept. 9, 2010 - Bong Ljungdahl and Hamelin have signed an agreement to merge Bong Ljungdahl and Hamelin's envelope division.
According to Bong, the newly combined company will have a turnover of around SEK 3.500 million (EUR 370 million) and some 2,400 employees.
The agreed deal structure is that Bong Ljungdahl will acquire Hamelin's entire envelope business. Payment for the acquisition will be made partly through an issue of 4, 352, 768 new shares corresponding to 24.9 percent of the shares in Bong after completion of the transaction.
In addition, Bong will issue convertible bonds with a total nominal value of 4 million euro to Hamelin. The convertible bonds can according to their terms be converted into 1 246 860 new shares in Bong, and together with the issued shares this will correspond to a total ownership of 29.9 per cent of the shares in Bong.
As part of the deal, Bong will in addition take over or refinance the net debt of Hamelin's envelope business totaling an approximately EUR 45 million including cash consideration. This will be financed by new, already approved credit facilities from Bong's existing banks, Bong said.
Hamelin will also give a vendor loan of Euro 7.5 million, which shall be amortized over a three-year period.
The new company will be called Bong and continue to be listed on the NASDAQ OMX Stockholm.
Bong and Hamelin have successfully co-operated in a strategic alliance since 2004 and are now taking the next step to create a strong European company with good growth prospects, Bong said in a written statement.
“We will increase our customer focus in order to become an even better supplier and our aim is to develop and grow together with our customers. The merger gives us enough scale and a good platform to do this” said Bong's president and CEO Anders Davidsson, who will continue to lead the company after the merger.
“With the merger we are able to extend our product offering significantly and, furthermore, we widen our geographic coverage, especially with the units in France, Spain and Poland,” Davidsson added.
Hamelin's president, Stephane Hamelin, will join Bong's board of directors following the merger.
Bong expects to reach yearly cost synergies of SEK 80-90 million (EUR 8-9 million) with full effect after two years, as a result of increased efficiency in many parts of the business, better purchasing, less internal freights, and other factors.
In addition, Bong is forecasting to be able to generate SEK 50-70 million (EUR 5-7 million) of improved cash flow the next coming years, mainly due to decreased working capital needs.
Bong expects the acquisition to be completed on October 22, 2010, with Hamelin's envelope business consolidated from October 1, 2010.
The deal is conditional upon a resolution to approve the transaction and issue new shares and convertibles at an extraordinary general meeting in Bong on October 22.
Shareholders representing 68.5 percent of the shares in Bong Ljungdahl AB today have expressed their support for the transaction, which is also supported by a unanimous board.
Bong is a leading European provider of specialised packaging and envelope products and offers solutions for distribution and packaging of information, advertising materials and lightweight goods. Two important growth areas in the Group are the new ProPac packaging concept and Russia. The Group has annual sales of approximately SEK 2 billion and some 1,200 employees in around 12 countries. Bong has a strong market position, particularly in Northern Europe, and the Group sees attractive opportunities for further expansion and development. Bong is a public limited company and its shares are quoted on the NASDAQ OMX Stockholm (Small Cap).
Hamelin is the leading European stationery manufacturer with a total turnover of Euro 700 million and 4,000 employees. Hamelin's key brands are ELBA (Filing), CANSON (Fine arts) and OXFORD (Books and Pads). The Envelope business has a turnover of about Euro 170 million and 1,200 employees.