STOCKHOLM, Nov. 27, 2019 /PRNewswire/ -- Ahlstrom-Munksjö
has signed a non-binding letter of intent with the majority
shareholders of Hebei Minglian New Materials Technology Co.,
Ltd. to acquire the company, comprising a
state-of-the-art greenfield decor paper plant in the city of
Xingtai, Hebei Province,
China. The debt free purchase
price is approximately EUR 60
million. The letter of intent contains customary exclusivity
undertakings on the part of the sellers with respect to the
considered transaction. The transaction is subject to further due
diligence and final and binding transaction agreements, and it is
expected to be completed during the first quarter of 2020.
By combining Minglian with its existing Decor business,
Ahlstrom-Munksjö would have a strong presence in the world's two
largest decor paper markets and improved cost competitiveness. The
deal would allow Ahlstrom-Munksjö to leverage its leading brand and
capabilities in the large and rapidly growing Chinese Decor paper
market and strengthen Ahlstrom-Munksjö's ability to serve
international customers both in the short- and long term.
Ahlstrom-Munksjö would provide technical and operational expertise
to Minglian and strengthen Minglian's commercial opportunities in
the domestic high quality segment and adjacent export markets.
Minglian New Materials was established in 2016 by a group of
experienced entrepreneurs with a background in the Chinese decor
industry through a greenfield investment in new state-of the art
paper machine technology and plant lay-out. The production started
at the end of 2018 and the ramp-up has progressed well. The machine
capacity is 50,000 tons per year.
"This planned deal is based on strong strategic and financial
logic and is evidence of our ambition to create a stand-alone
global leader in the decor paper industry. With Ahlstrom-Munksjö's
best in class quality, technology and brand leadership we would
have a lot to offer to potential partners, while leveraging
Minglian's local state-of-the-art production facilities. Through
the planned transaction we would gain several years of investment
lead time," says President and CEO Hans
Sohlström.
Ahlstrom-Munksjö explores strategic opportunities for its
Decor paper business
On 17 September, 2019,
Ahlstrom-Munksjö announced that it is exploring potential
acquisitions, mergers and joint-ventures with decor paper suppliers
in China to speed up the execution
of its strategy and capture the attractive value-creation
opportunity in the decor business. In addition, it was announced
that the company is investigating the possibility to attract
outside capital investment into the Decor business to further fund
such objectives.
About the Decor paper business
A leading decor paper supplier in growing
markets
The Decor business area is one of Ahlstrom-Munksjö`s five
reporting segments, with net sales of EUR
451.9 million and comparable EBITDA of EUR 37.1 million in 2018. The Decor business
produces paper in a wide range of colors, grades and grammages for
decorative applications, mainly used in laminated furniture,
flooring and interior applications both for technical and
esthetical purposes. The production takes place at five plants:
Unterkochen and Dettingen in Germany, Tolosa in Spain, Caieiras in Brazil and Arches in France. Annual production capacity is
approximately 230,000 tons.
Ahlstrom-Munksjö`s Decor business currently has strong market
positions in Europe and the
Americas, ranking as the second largest in Europe and the fourth largest in the world. It
is the leading brand globally competing with quality and service.
It is the only supplier with a dedicated R&D organization,
working in close cooperation with the R&D teams of our key
customers and main suppliers to innovate and bring added value. It
has a diverse product offering and is the global leader in high-end
decor paper segments such as solid colors and pre-impregnated
papers.
Ahlstrom-Munksjö`s ambition is to develop a leading and
profitable position in China,
which currently represents the largest and fastest growing decor
paper market in the world. The annual demand for decor products is
over 900,000 tons in China and
close to 600,000 tons in Europe.
The market trend growth is estimated at 4-5% p.a. in China and 2-3% p.a. in Europe. The demand is supported by population
growth, strong urbanization as well as a growing middle class.
Design trends and large investments in efficient wood-panel
production globally are also contributing to the decor paper demand
growth.
Forerunner in sustainability
Sustainability is a key priority for Ahlstrom-Munksjö and an
emerging business driver for the decor industry. Our ambition is to
be a forerunner in sustainability and we consider sustainability as
a strategic competitive advantage that brings value to customers
and strengthens business relationships. Our product offering
facilitates a more sustainable everyday life by providing solutions
that have better performance, use safer materials, use fewer
resources or have a lower impact than alternative materials. Our
decor papers are made of FSC certified pulp and are also available
without formaldehyde. There is also an ongoing substitution trend
within the panel-based furniture industry from plastic coatings to
decor paper.
Additional information
Johan
Lindh
Vice President
Communications and Investor Relations
+358-10-888-4994
Juho Erkheikki
Investor Relations Manager
+358-10-888-4731
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