Statement re Acquisition of Bates Container Cor...

Statement re Acquisition of Bates Container Corporation

Smurfit Kappa Group PLC

Smurfit Kappa Group to acquire Bates Container

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Dublin, London, 29 September, 2014: Smurfit Kappa Group (’SKG’ or the ‘Group’) one of the world’s largest integrated manufacturers of paper-based packaging products with operations in Europe and The Americas, is pleased to announce that it has agreed to acquire Bates Container LLC (‘Bates’), a non-integrated corrugated packaging manufacturer in the South West of the United States (the ‘Transaction’).

Bates is a long-established highly regarded private corrugated manufacturer strategically positioned to serve and grow its customer base in the wider Texas region by delivering high quality differentiated packaging solutions. Bates employs 320 people and a substantial element of its approximately 135,000 tonnes of containerboard requirement will be supplied by Smurfit Kappa Orange County’s (‘SKOC’) containerboard mill in Dallas.

This transaction, which will be immediately earnings accretive, will involve an initial consideration of US$150 million with a further estimated deferred payment of US$7.5 million. The acquisition is expected to complete in the fourth quarter of 2014 subject to customary regulatory approval, with funding from existing cash reserves. The pro forma 2014 EBITDA for Bates is expected to be US$18.5 million and the Group has identified synergies of US$11.5 million which it expects to deliver within 24 months of completion. Inclusive of synergies, the transaction will carry a pro-forma multiple of 5.25 times EBITDA.

Tony Smurfit, Smurfit Kappa Group COO stated, “This acquisition fits perfectly with our integrated model, complementing in a significant way the successful integration of SKOC which was acquired in December 2012 and providing us with substantial scope for further synergies in both businesses. These synergies will be primarily delivered through additional integration of the containerboard needs of Bates into SKOC’s 350,000 tonnes recycled containerboard mill, with additional savings expected through a range of operational efficiency measures. Importantly, the Group’s enlarged packaging footprint in the US will further enhance SKG’s capacity to provide innovative, insight-led and value enhancing packaging solutions to both current and prospective customers”.

Gary McGann, Smurfit Kappa Group CEO, said: “We are pleased to announce our agreement to acquire Bates Container Corporation and look forward to welcoming the excellent team from Bates into the Smurfit Kappa Group. The transaction reflects our continued focus on the accretive growth of our operations in the Americas and the combination of SKOC and Bates will increase our market presence and provide us with higher quality earnings in this region.”

ENDS

Contact
Seamus Murphy	FTI Consulting
Smurfit Kappa Group
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Notes to editors

About Smurfit Kappa

Smurfit Kappa is one of the leading producers of paper-based packaging in the world, with around 41,000 employees in approximately 350 production sites across 32 countries and with a sales revenue of €8 billion in 2013.

Innovation, service and pro-activity towards customers, using sustainable resources, is our primary focus. This focus is enhanced through us being an integrated producer, with our packaging plants sourcing the major part of their raw materials from our own paper mills. We are the European leader in paper-based packaging, operating in 21 countries selling products including corrugated, containerboard, bag-in-box, solidboard and solidboard packaging. We have a growing base in Eastern Europe in many of these product areas. We also have a key position in other product/market segments including graphicboard, MG paper and sack paper.

We are the only large scale pan regional player in the Americas, operating in 11 countries in total in North, Central and South America.

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www.smurfitkappa.com