Habgood said his group had moved away from the paper sector over the last 10 years, diversifying into plastics and outsourcing, and said "the price was right" to sell its UK and Ireland paper distribution business.

Proceeds from the deal will be used to reduce borrowings and could be put towards future outsourcing acquisitions.

PaperlinX said in a statement that the Bunzl Fine Paper business was "a clear fit and ideal for future growth in the UK and Europe".

PaperlinX is an international paper distributor and manufacturer, with merchanting businesses in Australia, Asia and North America.

It also owns Australian Paper, a printing and writing paper production facility in Australia.

The deal comprises 64.1m payable in cash upon completion, 56.7m of borrowings to be repaid or assumed by PaperlinX, and 18m of unconditional deferred cash consideration.

The sale should be completed by Monday (1 July).

With the acquisition of Bunzl, PaperlinXs sales will rise to 1.4bn (A$3.8bn), and sales volumes will hit 1.4m tonnes a year.

Bunzl Fine Paper has 900 employees spread across 30 branches in the UK and Ireland. It has 12,000 customers, a UK market share of 14%, and a capacity of 31,500 tonnes.

Bunzl Fine Paper consists of subsidiary companies Donald Murray Paper, Rothera & Brereton, Dixon & Roe, Southern Paper, Masons Paper, Donald Murray Paper, Europoint Display, the Reel Paper Company and North West Paper.

Story by Andy Scott