Ahlstrom, Munksjö to Form New Specialty Paper Company

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Ahlstrom Corp., Helsinki, Finland, and Munksjö AB, Stockholm, Sweden, principally owned by Swedish private equity firm EQT III, have agreed to form a new company named Munksjö Corp., to be headquartered in Stockholm. The new company, which combines Ahlstrom's label and processing business with Munksjö's specialty paper operations, had combined net sales in 2011 of EUR 1.3 billion. It will have approximately 3,300 employees at 16 production sites in Europe, Brazil, and China.

Munksjö Corp. is expected to achieve annual synergies of about EUR 25 - 30 million, once fully implemented.

Munksjö is one of Europe's leading players in specialty paper and specialty pulp. The group develops, manufactures, markets, and sells high-quality and value-creating specialty papers such as decor papers used in the manufacture of furniture, kitchen interiors, laminate flooring, etc. Products used in industrial applications include abrasive backings and electrotechnical papers for the insulation of high-voltage cables and transformers. Munksjö has production facilities in France, China, Germany, Spain, and Sweden and employs approximately 1,800.

Ahlstrom's products are used in a large variety of everyday applications such as filters, medical gowns, drapes, wall coverings, flooring, labels, and food packaging. It has 5,200 employees in 28 countries on six continents.

"The planned combination is the natural next step in Munksjö's strategy to become a leading, global specialty paper company, following the acquisition of ArjoWiggins' Decor, Abrasives, Thin Print Papers, and Fine Art businesses in 2011. It will lead to strengthened competitiveness and efficiency and bring added growth opportunities to the company, organically as well as strategically," said Jan Åström, CEO of Munksjö.

Following the proposed transaction, Munksjö's current shareholders will own approximately 29% of the new company and Ahlstrom's current shareholders will own approximately 50%. Institutional investors Varma and Ilmarinen as well as Ahlstrom and EQT III have been offered shares in a EUR 100 million directed share issue.

The new company has fully committed credit facilities with a net debt of approximately EUR 300 million at closing, leading to a capital structure well in line with the peer group.