World

SCA in €1.32bn move for G-P’s European tissue business

Swedish paper giant SCA has launched a binding offer to acquire Georgia-Pacific’s European tissue business for €1.32bn.

The move includes G-P’s consumer and AfH tissue paper products, personal care businesses and manufacturing assets across Europe. Its consumer brands as well as AfH and private label products are also included.

In an interview with Tissue World, SCA executive vice president Mats Berencreutz said the deal will increase the company’s geographical reach in Europe, strengthen its product offering and also increase its share in key markets.

He said: “If the outcome of this binding deal is finalised, we will have a leading tissue company.

“It will enable us to enhance our presence in key markets, as where we are weaker, GP is stronger. It is a very good fit, and should we close, it is a fantastic opportunity.” The 15 manufacturing sites involved have 5,000 staff and are positioned across Europe (see box).

“Global consolidation in the tissue sector is needed … where we are weaker, G-P is stronger. It is a very good fit, and should we close, it is a fantastic opportunity.” SCA’s Mats Berencreutz

SCA’s current market position in Europe in the consumer market is 25%, while AfH is 19%.

Some 60% of the company’s European consumer tissue output is of retail brand products, while 40% is branded. The move will push this to 50/50.

Berencreutz declined to say when the deal is likely to be closed, but added that it will be “several months”.

He was also unable to comment on how the acquisition will change the company’s market share in Europe, or at local locations globally, or whether the company could rule out further acquisitions in the future.

As to why SCA chose to acquire further in Europe as opposed to an emerging market, he said the business wanted full coverage of the European market.

He added that there are still further possibilities in eastern Europe, and that there is “potential to grow in Europe” generally.

“Global consolidation in the tissue sector is needed, and we have done our fair share,” he said.

Fears over possible job losses

SCA is consulting with employee representatives following the binding offer. Steve Sibbald, national officer of the UK’s Unite trade union, said the deal could affect thousands of workers in Europe.

G-P’s acceptance of the offer is subject to consultations with its national and European works councils.

Sibbald said that Unite will ensure its members, who are well represented on both works councils, are consulted before any decision is made that potentially affects their livelihoods.

“It always makes me nervous when companies talk about synergies, which usually means consolidation and job losses,” he added. SCA declined to comment on whether there will be any redundancies, or if there are plans to sell or shut down any of G-P’s operations after the deal is completed.

Jim Hannan, G-P chief executive and president, said: “G-P employees in Europe have worked hard over the last few years to make significant improvements in the business. “We believe SCA would be acquiring an excellent business with talented people.” G-P declined to comment further on whether it planned to completely exit the European tissue manufacturing sector.

It is yet to be seen whether the offer will cause issues with the European Commission in terms of competition.

SCA: drop in 3Q profit as tissue growth remains favourable

Last year, SCA reported a pre-tax profit drop of 7% to SEK 5,767m as it also announced a restructuring programme for its hygiene and packaging divisions.

The company said its 3Q interim results for 1 January to 30 September 2011 were impacted on by “increased uncertainty surrounding developments in the global economy”.

The pre-tax drop from SEK 6,218m a year earlier excluded restructuring costs. SCA chief executive and president Jan Johansson said: “Higher prices and volumes as well as cost savings have compensated for most of the SEK 3bn in higher raw materials costs, and higher costs for energy and distribution.”

Hygiene efficiency programme to cut 2,000 jobs

SCA also launched a cost-saving efficiency enhancement programme in the third quarter worth SEK 1,400m and targeting its hygiene and packaging businesses.

The third quarter was charged with SEK 350m in restructuring costs and the measures will lead to annual savings of approximately SEK 700m within a two-year period.

The efficiency measures will involve 2,000 staff reductions made in Personal Care, Tissue and Packaging.

Areas that could be impacted on include AfH, household and toilet paper, as well as personal care products such as incontinence, feminine products and baby diapers.

It is understood that the company has no intention to close any plants.

G-P sites involved in the deal
PM only: Stubbins (UK).
PM and converting: Allo (Spain), Bridgend
(UK), Cuijk (NL), Gien (France),
Hondouville (France), Kunheim (France),
Nokia (Finland), Patras (Greece).
Converting only: Horwich (UK),
Oughtibridge (France), Hlohovec (Slovakia),
Saint Etienne du Rouvray (France), Canary
Island (Spain), Carmona (Spain).

New chief executive at Metsä Tissue

Mika Joukio, head of M-real’s consumer packaging business and a member of Mreal’s management team, has been appointed as chief executive of Metsä Tissue.

He will take up the position, where he is also a member of the Metsäliitto group executive management team, in February 2012.

He will report to Kari Jordan, president and chief executive of Metsäliitto Group and chairman of the Metsä Tissue board of directors. Both M-real and Metsä Tissue are part of Metsäliitto Group.

The company was unavailable to comment further at this time.

Metso acquires American-based Fabco

Metso has boosted its technology and product offering to include the manufacture of filtration components after it acquired Fabco for an undisclosed sum.

The Winthrop, Maine-based company supplies industrial filtration products to the pulp and paper industries, and was affiliated to Metso’s paper and fibre technology division, Filtration Services, on 1 November.

Some 20 staff will move across following the purchase.

Metso said the acquisition will complement its current services, technology and product offering to the pulp industry in North America. Fabco has been manufacturing and servicing filtration components for the pulp and paper industry for over 30 years.

The filtration products can be used with different parts of the paper mill; woodyard, pulp mill, paper machine, and waste water treatment. Some of the main manufactured products are disc filter sectors, drum filter covers, belt press belts, sector covers, and vibrating and polishing filter screens.

Eric Tetreault, vice president of marketing and communications at Metso, confirmed to TW that the company will now operate under the Metso name.