Ahlstrom-Munksjo, a global leader in fibre based materials acquires Expera Speciality Solutions, a U.S. based paper producer, to expand its presence in North America and strengthen its offering of advanced custom-made fibre based materials.
The acquisition will almost triple Ahlstrom-Munksjo’s net sales in the U.S. and provide a platform for growth. The new acquisition combined with Caieiras acquisition announced in April, generated illustrative combined annual net sales of €2,921 million in 2017. Ahlstrom-Munksjo has secured committed financing for the transaction.
The partnership supports Ahlstrom-Munksjo’s intention to strengthen its position in selected high-end, value adding areas of the global fibre-based materials market that offer a positive growth outlook and are supported by market drivers for sustainable products and solutions.
Expera will provide opportunities for Ahlstrom-Munksjo regarding cross-selling and best practice sharing as well as preliminary cost synergies of approximately €8 million by the end of 2019. In addition, value will be generated from joint product development and sharing of best practices. One-time costs related to the achievement of synergies are estimated at €7 million. Strength in product development will help the company to improve customer services.
Hans Sohlstrom, President and CEO of Ahlstrom-Munksjo comments: “We are excited to welcome Expera and their highly talented leadership team led by Russ Wanke to Ahlstrom-Munksjo. Together, our combined, complementary capabilities and expertise will further strengthen our position in fibre-based materials and will enable us to offer even more solutions, value and efficiencies to our customers in North America and around the world. Expera contributes to our global platform with their competences, a high quality offering and a team that drives customer value, innovations and sustainability.”
“As a larger company with a strong balance sheet and greater earnings generation this transaction paves the way for further profitable growth to be carried out both organically and through acquisitions. While the transaction will temporarily increase our debt, over time we see an optimal leverage of around two times net debt to EBITDA, which gives us sufficient manoeuvring space for further development of the company. I appreciate also our continued strong ability to create cash flow as a combined company. We look forward to bringing this transaction to completion and working with the competent Expera team”.
Russ Wanke, the President and CEO of Expera, will become a member of Ahlstrom-Munksjo’s Executive Management Team following the closing of the acquisition. He will be responsible for the acquired operations, which will create a fifth business area and reporting segment in Ahlstrom-Munksjo. Furthermore, Russ Wanke and other members of the management team will invest in Ahlstrom-Munksjo shares in connection with the transaction.
Russ Wanke, Expera’s Chief Executive Officer, said, “This is the beginning of an exciting new era for Expera’s team and customers. Joining Ahlstrom-Munksjo, a global leader in fibre-based materials, strengthens Expera’s platform and allows for growth in the future. This is an important development for our customers, employees and communities, as we continue to capitalise on the strength of the speciality paper industry worldwide, and provide innovative products with a superior level of service.” Wanke continued, “Our entire team is very excited about Ahlstrom-Munksjo’s commitment to manufacturing excellence and to supporting our innovative business.”
Ahlstrom-Munksjo has secured full-committed financing for the transaction. Ahlstrom-Munksjo has secured $615 million in bank financing for the acquisition from Nordea Bank AB (“Nordea”) and Skandinaviska Enskilda Banken AB (“SEB”), together acting as Mandated Lead Arrangers, Underwriters and Bookrunners. The acquisition financing consists of the following: (i) an $180 million bridge-to-equity facility with completion date of 30th June 2019, (ii) an $185 million bridge facility with 12 month maturity from the earlier of the closing and 3 months from signing and (iii) an $250 million term loan facility with 5 years maturity from the earlier of the closing and 3 months from signing.
Additionally, Nordea and SEB have agreed to provide certain back-stop/refinancing facilities in relation to existing financing arrangements.
To finance part of the transaction, Ahlstrom-Munksjo intend to conduct a rights offering of approximately €150 million, which is expected to be launched during the fourth quarter of 2018.
The company will separately convene a general meeting of shareholders (EGM) to authorise the Board of Directors to resolve on the share issue. Shareholders holding in aggregate approximately 35.9 percent (June 30, 2018) of the shares and votes in the Company, AC Invest Five B.V., a company belonging to Ahlstrom Capital group, Viknum AB, Belgrano Inversiones Oy, Ilmarinen Mutual Pension Insurance Company, Varma Mutual Pension Insurance Company and Baltiska Handels A.B. have irrevocably undertaken to attend the EGM and vote in favor of the share issue authorisation. AC Invest Five B.V., a company belonging to Ahlström Capital group, Viknum AB, Belgrano Inversiones Oy and Baltiska Handels A.B. have further expressed their support and intention to subscribe for their respective pro rata allocation in the rights offering. The remainder of the rights offering will be underwritten by Nordea and SEB, subject to customary terms and conditions.
The proceeds from the rights offering will be utilised for financing the transaction or repayment of outstanding bridge facilities related to the transaction.
Closing of the acquisition is subject to regulatory approvals and other customary closing conditions. The acquisition is expected to close during the second half of 2018.