Ahlstrom-Munksjö announced two investment projects, totaling €9 million, both with attractive financial returns. 

In the Decor business area, the company will invest about €5 million to further enhance the quality of pre-impregnated decor papers produced at its Dettingen plant in Germany. Through the investment, which will be completed by the end of 2018, Ahlstrom-Munksjö will be able to strengthen its leading position in pre-impregnated decor papers. Ahlstrom-Munksjö is the global leading manufacturer of paper-based surfacing for wood based materials such as laminate flooring, furniture and interiors.

In the Specialties business area, the company will invest about €4 million to rebuild a converting line of sterilization wrap being produced at its Pont Audemer plant in France. The material is used for protecting medical garments and sterilizing instruments. The investment includes installing a new sheeter and folding line as well as automated wrapping and boxing of the finished goods. Through the investment, which will be completed by the second quarter of 2019, the business will improve its competitiveness through higher efficiency and shorter lead times. The Specialties business area produces materials for food and beverage packaging, laboratory filters and life science diagnostics, water filtration, tape products and medical fabrics.

These projects will not materially impact current year’s capital expenditure plan. The capital expenditure guidance for 2018, published on February 13, 2018, remains unchanged.

In other news, Ahlstrom-Munksjö has entered into an agreement to acquire MD Papéis’ Caieiras specialty paper mill in Brazil of the Formitex Group, an industrial conglomerate active in the paper, chemicals and panel board industries.

The annual net sales of the business to be acquired are approximately €80 million and comparable EBITDA approximately €13 million in 2017. The debt free purchase price is approximately €100 million. Annual synergy benefits of up to €6 million are estimated, mainly arising from optimization of overlapping business. 

The transaction is expected to be completed during the third quarter of 2018 and is subject to customary completion terms, including merger clearance from the relevant competition authorities.

The Caieiras product offering is an excellent match for Ahlstrom-Munksjö with 80% of sales being in line with Ahlstrom-Munksjö’s current product and solution portfolio. The acquisition significantly strengthens Ahlstrom-Munksjö’s offering and production platform in the region, and provides attractive growth opportunities, synergies and further production optimization opportunities for the longer term. The Caieiras mill is located in the vicinity of Ahlstrom-Munksjö’s existing production plants in Jacarei, part of the Industrial Solutions business area, and in Louveira, part of the Filtration and Performance business area. The mill gives access to local production of decor paper, thus strengthening Ahlstrom-Munksjö’s service offering and partnership with existing customers, which so far has relied on imports. Ahlstrom-Munksjö becomes a global leading producer in decor paper, and the mill is a competitive platform for further growth in South America. Ahlstrom-Munksjö is already a global leading supplier in tape, serving both local and global customers, and this position is further strengthened through the transaction. And in addition by combining the businesses of Caieiras and Jacarei Ahlstrom-Munksjö improves production and delivery capability as well as competitiveness.

Ahlstrom-Munksjö’s presence in Brazil grows further through the acquisition, operating three plants, all near Sao Paolo, and employing over 700 persons and revenues of approximately of €200 million.