Sappi received binding offers from several parties. Following due process, the company’s board agreed to proceed with the offer from Aurelius.
The sale will be subject to various standard suspensive conditions and is expected to close in the first calendar quarter of 2023 once all these conditions have been fulfilled. A transitional services agreement will also be entered into to ensure a smooth transition of the businesses between the parties.
Sappi CEO Steve Binnie said: “We are very happy to have reached agreement with Aurelius to take ownership of the three mills. Although they no longer fit in Sappi’s portfolio, they are strong assets with good people.
“The decision to sell these mills follows a detailed and thorough strategic review by Sappi in line with our group Thrive25 strategic focus.
“This includes reducing exposure to the graphic paper segment while expanding Sappi’s presence in segments including packaging and speciality papers, pulp, and biomaterials. Recent investments across our South African, American, and European operating businesses demonstrate this priority.”
The enterprise value of the sale amounts to approximately €272m (£243m). The consideration consists of cash proceeds and retained receivables of €212m as well as retained liabilities of €60m.
The proceeds will be used to reduce debt further and continue to increase Sappi’s focus on the identified growth segments. The net loss after tax attributable to the net assets of the three mills for the last twelve months ended 31 March 2022 was €6.5m.
Sappi said that given the current volatile market conditions, the EBITDA for the same period for the three mills was €58m. As a comparison, the EBITDA for the pre-Covid period of twelve months to September 2019 for the three mills was €40m.
Marco Eikelenboom, CEO of Sappi Europe, added: “Going forward Sappi’s focus in Europe as regards graphic paper will be on the stronger commercial print market.
“In addition, in the packaging and specialities segment, the European business will predominantly focus on the flexible packaging, functional papers, self-adhesives including glassine, labels as well as dye-sublimation categories.
“We believe this sale will help unlock potential value at each mill which would be best pursued by a new owner. Our strategic focus is on market segments not served by these mills.”
Agfa is planning to sell its Offset Solutions division to Aurelius in a separate €92m deal revealed last month. Aurelius’ past involvement with the printing industry came via its ownership of Stralfors, which it rebranded as Imprimus, and Office Depot Europe.
On the Sappi deal, Aurelius founding partner Dirk Markus said: “The market for pulp and paper products is of particular interest to Aurelius considering our industrial sector expertise.
“We combine a proven track record in complex carve-outs with a deep understanding of how to identify and unlock value creation potential. Given these key traits, this transaction offers ample opportunity to unleash the full potential of these production sites.”
Sappi’s Maastricht Mill produces 260,000tpa of coated woodfree paper and paperboard, mainly sold to printers and packaging converters globally.
Stockstadt Mill is an integrated pulp and paper mill located in Germany, producing 145,000tpa of pulp which is used to produce 220,000tpa of coated and uncoated woodfree paper mainly sold into the European print market.
Kirkniemi Mill is an integrated pulp and paper mill located in Finland, producing 300,000tpa of bleached mechanical pulp which is used to produce approximately 750,000tpa of a variety of coated mechanical paper grades used in the print publication industry globally.
Headquartered in Johannesburg, South Africa, Sappi has over 12,000 staff, manufacturing facilities on three continents, in ten countries, and customers in over 150 countries worldwide.
Earlier this month, Sappi Europe said it would extend capacity at its mill in Gratkorn, Austria, while temporarily reducing capacity at its Carmignano mill in Italy.
