Munksjo to Combine with Ahlstrom's Label and Processing Business

"The planned combination is the natural next step in Munksjo's strategy to become a leading, global specialty paper company." – Jan Astrom, President and CEO of Munksjo.

Aug. 28, 2012 (Press Release) - Munksjo and Ahlstrom Corporation have agreed on combining Ahlstrom's Label and Processing business area with Munksjo, forming a new company to be named Munksjo Corporation. The new company will be a global leader in specialty paper with combined net sales in 2011 of EUR 1.3 billion.

The new company will have approximately 3,300 employees at 16 production sites in Europe, Brazil and China.

"The planned combination is the natural next step in Munksjo's strategy to become a leading, global specialty paper company, following the acquisition of ArjoWiggins' Decor, Abrasives, Thin Print Papers and Fine Art businesses in 2011. It will lead to strengthened competitiveness and efficiency and bring added growth opportunities to the company, organically as well as strategically," says Jan Astrom, President and CEO of Munksjo.

Following the proposed transaction Munksjo´s current shareholders will own approximately 29 percent of the new company and Ahlstrom's current shareholders will own approximately 50 percent. Institutional investors Varma and Ilmarinen as well as Ahlstrom and EQT III have been offered shares in a EUR 100 million directed share issue. The directed share issue is fully subscribed. The new company has fully committed credit facilities with a net debt of approximately EUR 300 million at closing, leading to a capital structure well in line with the peer group.

Trading of the shares in the new company is expected to commence during the first quarter of 2013 on NASDAQ OMX Helsinki.

Transaction rationale
The clear strategic fit between the two business both with speciality paper as the core business, will serve as a platform for continued growth.

The new combined company will become one of the world's largest specialty paper companies with strong market positions in attractive market segments. Munksjo will, after the transaction, offer and serve its global customers with a unique product offering for a large number of fibre-based industrial applications and consumer-driven products. The customer relationships, deep knowledge of customer needs and high technical expertise in production and product development will contribute to the sustainability of these strong market positions.

The transaction is expected to create synergies in the form of cost savings and efficiency improvements. Annual synergies, once fully implemented, are estimated to reach EUR 25-30 million, mainly relating to purchasing, production efficiencies, pulp, logistics and sales. Of the identified synergies, 60 percent are expected to be achieved within 12 months following the closing of the transaction. The remaining synergies are expected to be reached within the following two to three years.

Munksjo and Ahlstrom Corporation's Label and Processing business area forming a new company — Munksjo Corporation
Munksjo is a specialty paper company headquartered in Stockholm, Sweden. The company's majority owner is the private equity fund EQT III. In 2011, Munksjo's net sales were EUR 645 million (net sales are adjusted for Munksjo's acquisition of operations from ArjoWiggins, which was completed in March 2011). Munksjo employs approximately 1,800 and has ten productionfacilities in Europe and Asia. Its main products include Decor papers, Abrasive backings, Electrotechnical papers and long-fibre Specialty Pulp.

In 2011, Ahlstrom Corporation´s Label and Processing business (the combined LP Europe and Coated Specialities) had net sales of EUR 6811 million. The business area employs approximately 1,500 and has six productionfacilities in Europe and South America. Its main products include release liners, self-adhesive labels, base paper for metalized labels, flexible packaging papers, poster papers, decor papers, and abrasive backings. The mills that will be part of the transaction are Osnabruck in Germany, La Gere, Rottersac and Stenay in France, the Label and Processing operations in Turin, Italy and the coated specialities mill in Jacarei, Brazil.

Jan Astrom, the President and CEO of Munksjo AB, will become the President and CEO of the new company.

Peter Seligson has been appointed Chairman of the intermediate Board of Directors of Munksjo Corporation.

The head office will be located in Stockholm, Sweden and the shares will be listed on NASDAQ OMX Helsinki. A future listing on NASDAQ OMX Stockholm is being considered.

Transaction conditions and time line
The shareholders of Munksjo have approved the planned combination. The transaction does in addition require approval of the Extraordinary Shareholders' Meeting of Ahlstrom Corporation that is planned to be held in November 2012.

The transaction is expected to be completed during the first quarter of 2013 and is subject to customary completion terms, such as merger clearances from relevant competition authorities including the European Commission. Trading in shares of the new company is planned to commence during the first quarter of 2013.

Furthermore, Ahlstrom's operations in Brazil will be demerged into Munksjo Corporation in a separate transaction, expected to be completed by the end of the second quarter of 2013. This is to allow enough time to receive all the necessary regulatory approvals in Brazil and is not a prerequisite for the public listing of the company.

SOURCE: Munksjo