The Board of Powerflute Oyj, the paper and packaging group has entered into a conditional agreement with Stora Enso Oyj to acquire Corenso, an international cores and coreboard producer. The adjusted enterprise value for the acquisition on a cash and debt free basis is expected to be €81 million. The acquisition remains subject to, amongst other things, Powerflute shareholder approval.
The acquisition would constitute a reverse takeover under the AIM Rules, requiring an EGM scheduled to be held on 4 November 2014 with closing and re-admission expected to take place on 28 November 2014.
- Corenso operates 12 cores plants across Europe, the United States and China and three coreboard mills in Finland, France and the United States
- In the six months ended 30 June 2014, Corenso generated revenues of €97 million, EBITDA of €11 million and operating profit of €8 million
- Acquisition will be financed from existing cash resources and new debt facilities of €120 million consisting of:
- €80 million proposed bond issuance, to be launched shortly and expected to be completed before Closing, and underwritten by an €80m bridge facility; and
- €40 million revolving credit facility
- Stora Enso will continue to be the largest single customer of Corenso and has entered into a core supply agreement for an initial period of five years
- Separation from Stora Enso, and integration with Powerflute, will be supported by Transitional Service Agreements for all key services
Impact on Powerflute:
- Proposed transaction is firmly aligned with Powerflute's strategy and offers significant opportunities to improve performance and deliver growth
- Acquisition will materially increase the scale of Powerflute, with combined EBITDA generated in the six months ended 30 June 2014 in excess of €20 million
- Acquisition is expected to be immediately earnings enhancing
Powerflute also today announces its interim results for the six months ended 30 June 2014 which are notified separately.
Dermot Smurfit, chairman of Powerflute, commented:
"The acquisition represents a significant development for both Powerflute and Corenso and provides an excellent opportunity for Powerflute to deploy its considerable operational expertise and market knowledge to deliver value for shareholders. Corenso is one of the world's leading producers of high performance cores and core board and we look forward to working with the management and employees of the business to enhance performance and to further expand its presence in both existing and new markets. Following completion of the Acquisition, Powerflute will be a significantly larger business which we believe will provide us with a strong foundation from which to pursue further acquisition opportunities within the sector in due course."
A combined Admission Document and Circular is being sent to the Company's shareholders today and will be available on the Investor Relations section of the Company's website at www.powerflute.com