Huhtamaki to sell bulk of European rigid packaging ops in cut price deal
The Finnish company said today it had agreed a deal with Island Lux S.à r.l. & Partners S.C.A for the business that has annual net sales of €160 million and some 1,100 workers. The company is an affiliate of Sun European Partners, LLP - the European adviser to US-based private investment firm Sun Capital Partners, Inc.
However, a financial expert told FoodProductionDaily.com the sale price fell around 30 per cent short of market valuations but said there was relief that a deal had been struck.
The transaction is subject to the approval of European competition authorities and the company said it does not expect any decision for a “few months”.
The divested operations include facilities in Hämeenlinna, Finland; Auneau, France; Siemianowice, Poland; and Istanbul, Turkey, as well as sales units in Germany and Lithuania. The sites serve primarily the dairy, edible fats, ready meal and ice cream sectors. The Italian arm of the business, however, remains unsold and remains under strategic review, said a Huhtamaki spokeswoman.
Market relief
One European analyst, who did not wish to be named, estimated that Huhtamaki had sold the business for around a third less that its market valuation.
“€52m is not a good price as it represents around a third of sales,” added the financial expert who tracks the company. “It is well short of the market expectation of €70-75m and reflects the company’s view that it believes profitability lies in other sectors.”
But the analyst added the deal was a “relief” inthe market and the firm’s shares had risen slightly on news of the sell-off.
The Finnish packaging firm declared its intention to offload its rigid packaging operations in 2008. The company decided the fragmented nature of the sector combined with its non-leading market position meant profits would never match its own expectations. Since then it has divested operations in South Africa and Australia in a bid to focus on its flexible packaging and moulded fibre operations where it can leverage better margins.
“Huhtamaki is one of three biggest global operators in moulded fibres and also very strong in the flexible segment,” said the analyst.
CEO Jukka Moisio said he was “very pleased” with the agreement and that selling to a single buyer was a “positive outcome”
Lionel de Posson, Sun European Partners vice president, said: “We are very pleased to have reached an agreement to purchase such a high quality business in the speciality packaging industry. Speciality packaging is a sector in which we have considerable experience and continue to grow, as demonstrated by the acquisition of Alcan Packaging Beauty earlier this year.”
