Mondi terminates Walki acquisition after European Commission concerns

By Jenny Eagle

- Last updated on GMT

Related tags European union

Mondi terminates Walki acquisition
Mondi Group has terminated its application to acquire Walki after being unable to find a ‘workable solution’ with the European Commission over competition concerns in the market segment.

Mondi signed an agreement with Walki​ to acquire two extrusion coatings plants in Pietarsaari, Finland and Wroclaw, Poland in May this year.

Deal was expected to close by Q3, 2015

The firm was expected to pay €60m on a debt- and cash-free basis to strengthen its position in the European extrusion coatings market and increase its technical capabilities.

The transaction, subject to competition clearance and other customary closure conditions was expected to be completed by Q3 2015.

The company said in a statement: “Following the announcement made on 22 May 2015 that Mondi Group (Mondi) agreed to acquire two of Walki Group’s (Walki) extrusion coatings plants located in Finland and Poland, Mondi and Walki have been in discussions with the European Commission about ways to alleviate concerns related to the impact on the competitive environment​.

However, no workable solution suitable for all parties has been found and therefore Walki and Mondi have decided to withdraw the application to the Commission and terminate the acquisition agreement​.

Extrusion coatings remain a core part of Mondi’s business and product portfolio and Mondi will continue to operate its extrusion coatings business as before to the benefit of its customers and other stakeholders​.”

Mondi is a packaging and paper group, employing around 25,000 people across 30 countries with key operations in Central Europe, Russia, North America and South Africa.

European Commission investigation

The European Commission opened an in-depth investigation​ into whether the proposed acquisition was in line with the EU Merger Regulation in September this year.

It said at the time it had concerns the acquisition could lead to less choice and higher prices for customers of certain packaging materials used for example to transport and protect fresh food or paper.

"The proposed merger could remove a key competitor for several types of packaging material. These are used in everyday items such as food packaging,” ​said Margrethe Vestager, commissioner in charge of competition policy.

“I am concerned the merger would lead to higher prices and less choice for these companies' clients and the price increases could ultimately be passed on to consumers."

The two companies are suppliers in the European Economic Area (EEA) of several products derived from extrusion coating, which is a process through which a molten resin is added on to a substrate material.

It is a coating technique that results in a strong and moisture resistant foil employed with a large number of uses, like paper packaging, envelopes, food wrapping and bags, timber wrapping, and insulation materials for construction.

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