Reuters – Oaktree Exits Nordenia in $782M Deal

South Africa’s Mondi Group said it will buy German packaging firm Nordenia International from Oaktree Capital, in a $782 million deal that will give the paper maker a bigger presence in consumer packaging. Mondi, which has largely focused on emerging markets with its $3.2 billion marketcap, said on Wednesday it will buy 93.4 percent of Nordenia from private equity firm Oaktree and other minority shareholders in a cash and debt deal.

(Reuters) – South Africa’s Mondi Group said it will buy German packaging firm Nordenia International from Oaktree Capital, in a $782 million deal that will give the paper maker a bigger presence in consumer packaging.

 

Mondi, which has largely focused on emerging markets with its $3.2 billion marketcap, said on Wednesday it will buy 93.4 percent of Nordenia from private equity firm Oaktree and other minority shareholders in a cash and debt deal.

 

Nordenia makes more than 90 percent of its revenues from the packaging and components of consumer products such as pet food, diapers and chocolate bars. It has operations across Europe, North America and Asia, but draws nearly 60 percent of its sales from Western Europe.

 

“Nordenia is an attractive business in its own right and it has synergies with the much smaller consumer packaging business that Mondi has,” said Justin Jordan, an analyst with Jeffries in London.

 

“The consumer packaging niche is growing structurally, more rapidly than perhaps some areas within Mondi.”

 

As the global paper industry struggles with overcapacity and weak demand, Mondi, like its rivals, has been on a push to diversify its business.

 

Consumer packaging contributed only about 5 percent of Mondi’s group revenue in the year to December 2011, according to company reports.

 

Mondi said it would pay 240 million euros in cash and assume 398 million euros worth of Nordenia’s debt, valuing the acquisition at 638 million euros ($782 million).

 

The cash portion of the deal will be funded from 250 million euros in new bank lending, Mondi said.

 

Mondi estimated the acquisition would lead to 15 million euros in annual pre-tax cost synergies, and said it would be able to keep its dividend policy unchanged.

 

The transaction is expected to be completed by the fourth quarter of this year, subject to competition clearances.

 

Investment bank Rothschild acted as the adviser to Mondi on the transaction.

 

Johannesburg-listed shares of Mondi were down 0.7 percent at 70.80 rand. Shares of the company are up 25 percent so far this year, outperforming a 5 percent rise in Johannesburg’s Top-40 index. (By David Dolan and Tiisetso Motsoeneng)