PaperAge Magazine

Ahlstrom and Munksjö Announce Proposed Merger

Munksjo Ahlstrom products Together, the companies will be able to serve a broad range of end-market segments with complementary product and service offerings (e.g., filtration and abrasives to the automotive industry as well as food and beverage packaging and release liners to the food and beverage industry).

Nov. 7, 2016 - The Boards of Directors of Munksjö Oyj and Ahlstrom Corporation announced the combination of the two companies through a merger. The proposed combination of the two companies would have preliminary combined annual net sales of approximately EUR 2.2 billion and adjusted EBITDA of EUR 249 million. (Based on the twelve months ended 30 September 2016. Excluding merger effects and Ahlstrom's divestment of Osnabrück).

The deal will be implemented as a statutory absorption merger whereby Ahlstrom will be merged into Munksjö. The combined company will have approximately 6,200 employees as well as production in 14 countries.

Annual cost synergies are estimated to be approximately EUR 35 million. The cost synergies are expected to be gradually realized over two years following completion of the combination with a more pronounced impact expected from the fourth quarter of 2017.

The completion of the merger is subject to, inter alia, approval by the Extraordinary General Meetings (each, an "EGM") of Munksjö and Ahlstrom, which are currently expected to be held on 11 January 2017, as well as merger control approvals from relevant competition authorities.

The combination is expected to be completed in the beginning of the second quarter of 2017.

Peter Seligson, Chairman of the Board of Munksjö, commented, “After the very successful integration of our acquired businesses during the past years and strong operating performance, the combination with Ahlstrom is a natural first step in the execution of our growth strategy, combining two leading businesses into one strong engine for performance and growth. The combined company will be positioned for strong long term-financial returns partly through the significant communicated cost synergies but mainly through enhanced future competitiveness and growth opportunities."

Hans Sohlström, Chairman of the Board of Ahlstrom, continued, "During the past two years the Ahlstrom management has executed a very focused and successful business turn-around by shedding costs and by focusing on commercial excellence with new products and value adding solutions for our customers. The financial results speak for themselves. The combination now enables us to directly jump into a growth mode with a much stronger balance sheet and greater earnings potential which will benefit our shareholders and our customers as well as other stakeholders. We will together be able to leverage several strategic advantages and we will focus on shareholder returns through increased profits as well as profitable global growth initiatives in the area of sustainable and innovative fiber-based solutions."

The combination will create a company with leading global positions in the main product areas decor, filtration and release liners. Together, the companies will be able to serve a broad range of end-market segments with complementary product and service offerings (e.g., filtration and abrasives to the automotive industry as well as food and beverage packaging and release liners to the food and beverage industry), which creates potential for innovation within new customer-focused solutions.

The two companies have complementary geographical footprints, as Munksjö has strong market positions in Europe and South America and Ahlstrom has strong market positions in Europe, North America and Asia, which opens up new geographical growth opportunities through coordination of the product portfolios and distribution and logistics networks.

Synergies

The combination is expected to create significant value for the stakeholders in the combined company through synergies resulting from the coordination of the operations of the two companies. Short to mid-term, the annual cost synergies are estimated to be approximately EUR 35 million.

The majority of the planned cost synergies are expected to be achieved through organisational streamlining, mainly within general, administrative and sales expenses (SG&A) as well as through a focusing of central administration and a combination of administration for closely located sales offices and mills. The remaining planned cost synergies are mainly expected to be reached through coordination of purchasing and production.

The annual cost synergies are expected to be gradually realized over two years following completion of the combination. A more pronounced impact on the combined company's profitability is expected from the fourth quarter of 2017 and the cost synergies are expected to be fully realized as from the second quarter of 2019.

The full version of this press statement is available at: www.ahlstrom.com.

Ahlstrom is a high performance fiber-based materials company. Its products are used in a large variety of everyday applications, such as filters, medical gowns and drapes, diagnostics, wallcoverings, flooring and food packaging. To learn more, please visit: www.ahlstrom.com.

Munksjö Oyj is an international specialty paper company. Product offerings include decor paper, release paper, electrotechnical paper, abrasive backings, graphic and industrial paper and interleaving paper. To learn more, please visit: www.munksjo.com.

SOURCE: Ahlstrom