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Mayr-Melnhof Group to Acquire Kotkamills for EUR 425 Million

Kotkamills produces virgin fiber based cartonboard (FBB) and Food Service Board (FSB) and operates two paper machines at its integrated mill in Kotka in southern Finland.

Dec. 10, 2020 - Mayr-Melnhof Group on Dec. 9 announced an agreement to acquire Kotkamills Group Oyj from its shareholders for an enterprise value of around EUR 425 million.

In a written statement, Mayr-Melnhof said, "The addition of Kotkamills will grow MMK's position in the attractive virgin fiber based cartonboard (FBB) and Food Service Board (FSB) market, complementing [Mayr-Melnhof's] established position in recycled fiber based board."

The proposed transaction will be immediately accretive to earnings, the company noted.

"The acquisition of Kotkamills is an ideal complement to our existing cartonboard business," said Peter Oswald, Chairman and CEO of Mayr-Melnhof . "It strengthens MM's business model as a dedicated cartonboard and folding carton producer with a reinforced position in virgin fiber based cartonboard, which has good growth potential."

Kotkamills CEO, Markku Hämäläinen, added ”From Kotkamills’ point-of-view this acquisition is a perfect match. Mayr-Melnhof Karton will provide Kotkamills a strong foothold in the carton board market with the barrier coated FSB solutions which can replace plastic and polyethylene-coated board.”

Kotkamills operates two paper machines at its integrated mill in Kotka in southern Finland:

• a FBB/FSB board machine (BM2) that started up in 2016 following an investment of more than EUR 180 million and has a production capacity of about 260 tonnes per year and a planned capacity of 400 tonnes per year;
• a Saturated Kraft paper machine with a production capacity of 170 tonnes per year in which the company is a leading global supplier.

Kotkamills employs about 500 people and generates an LTM EBITDA of ca. EUR 55 million on sales of ca. EUR 380 million.

Strategic Rationale

• Strengthen Mayr-Melnhof Group's competitive position in a growing European FBB and FSB market versus the two market leaders
• Create a strong second pillar in addition to Coated Recycled Board (RCB) and Coated Liner
• Benefit from ramp-up of FBB and FSB volumes (from current sales volumes of 260kt to planned capacity of 400kt)
• Offer barrier coated FSB solutions which can replace plastic and polyethylen-coated board
• Diversify the business by adding a new product (with Kotkamills' strong competitive position in high-quality Saturating Base Kraft)
• Harvest synergy potential

Mayr-Melnhof's cash payment will be funded from committed credit lines.

The transaction is subject to customary completion conditions and regulatory approval.

Closing of the transaction is expected by mid of 2021.

The Mayr-Melnhof Group is the world’s largest producer of coated recycled fiber-based cartonboard, an important manufacturer of virgin fiber-based cartonboard and the largest producer of folding cartons in Europe. To learn more, visit: www.mayr-melnhof.com.

SOURCE: Mayr-Melnhof Karton AG