Firm amends segment reporting and appoints a new member of the Executive Management Team
Ahlstrom-Munksjö has completed on OPctober 10, 2018 the acquisition of U.S. specialty paper producer Expera Specialty Solutions for an enterprise value of USD 615 million (EUR 526 million) on a cash and debt free basis. The transformative acquisition will expand the company’s presence in North America and further strengthen its offering of advanced custom-made fibre-based materials. The earnings enhancing transaction will almost triple Ahlstrom-Munksjö’s net sales in the U.S. and provide a platform for growth.
- Expera is among the leading specialty paper producers in North America with four paper mills, of which two have integrated pulp production, in the state of Wisconsin, U.S.
- The acquired operations had net sales of USD 721 million (EUR 616 million) and a comparable EBITDA of USD 71 million (EUR 61 million) in 2017.
– Comparable EBITDA includes USD 3 million (EUR 3 million) of items which will not have a continuous impact on EBITDA such as start-up cost of investment and management fees.
– Near term annual synergy benefits of approximately USD 10 million (EUR 8 million) are estimated to be achieved by year end 2019. One-time costs related to the achievement of synergies are estimated at EUR 7 million (USD 8 million). In addition, recently finalized investment offers additional earnings potential of approximately USD 11 million (EUR 9 million) annually when fully commissioned.
– The transaction also enables dynamic synergies relating to product development and best practice sharing.
Hans Sohlström, President and CEO of Ahlstrom-Munksjö, comments: “This acquisition is a major step in the execution of our strategy. It will further strengthen our position in fibre-based materials and enable us to offer more value to our customers, particularly in North America, but also around the world. We have complementary capabilities and can create further value through joint product development and sharing of best practices. Finally, I would like to welcome Expera’s personnel to Ahlstrom-Munksjö. “
The acquisition was announced on July 23, 2018. Customary regulatory approvals have been received for the transaction.
Expera will be consolidated as part of Ahlstrom-Munksjö from October 10, 2018 onwards with more detailed information on the impact of the acquisition to its consolidated accounts in the fourth quarter report. The acquired operations form Ahlstrom-Munksjö’s fifth business area and financial reporting segment, named North America Specialty Solutions. In addition, as described below in more detail, Ahlstrom-Munksjö plans to publish unaudited pro forma financial information at the latest in connection with the rights issue, which is expected to be launched during the fourth quarter of 2018.
Russ Wanke, the former President and CEO of Expera, has been appointed Executive Vice President, North America Specialty Solutions and a member of Ahlstrom-Munksjö’s Executive Management Team.
Key figures Expera (US GAAP)
* Expera EBITDA 2016 includes an expense item of EUR 1.5 million relating to a change in the contingent consideration payable, a reimbursement income for certain capital investment projects of EUR 2.7 million and other expense items of EUR 0.4 million that are, based on currently available information, considered as adjusting items. In addition, Expera EBITDA 2016 includes EUR 1.4 million of current management fees and EUR 0.1 million of start-up costs related to investments which will not have a continuous impact on EBITDA. The selected Expera financial information for the year 2016 is presented for continuing operations.
** Expera EBITDA 2017 includes expense an item of EUR 3.8 million relating to a change in contingent consideration payable pursuant to a purchase agreement and other items that are, based on management’s preliminary assessment, considered to be outside ordinary course of business of EUR 0.9 million, net expense which are considered as adjusting items in accordance with Ahlstrom-Munksjö principles. In addition, Expera EBITDA 2017 includes EUR 1.5 million of current management fees as well as EUR 0.9 million of start-up costs related to investments which will not have a continuous impact on EBITDA.
*** Expera EBITDA 1-6 2018 includes a net expense item of EUR 1.4 million, relating mainly to contingent consideration payable pursuant to a purchase agreement and transaction related expenses.
****Unaudited, based on management reports
Basis of preparation of selected financial information
The selected financial information presented above is based on Expera’s audited financial statements for the financial years 2017 and 2016 prepared in accordance with US GAAP. The figures have been rounded to the nearest million.
Expera’s financial information in USD has been converted into EUR using the EUR/USD exchange rate 1.17.
Ahlstrom-Munksjö plans to publish unaudited pro forma financial information to illustrate the impact of the acquisitions of Expera and Caieiras, announced in April 2018, and the related financing transactions to Ahlstrom-Munksjö’s 2017 and January-September 2018 financial information prepared in accordance with IFRS at the latest in connection with the rights issue, which is expected to be launched during the fourth quarter of 2018. The pro forma financial information will provide further information on Expera’s historical results and the impacts of the Expera acquisition to Ahlstrom-Munksjö’s financial position.
Ahlstrom-Munksjö is a global leader in fibre-based materials, supplying innovative and sustainable solutions to its customers. Our mission is to expand the role of fibre-based solutions for sustainable everyday life. Our offering include filter materials, release liners, food and beverage processing materials, decor papers, abrasive and tape backings, electrotechnical paper, glass fibre materials, medical fibre materials and solutions for diagnostics as well as a range of specialty papers for industrial and consumer end-uses. Our annual net sales are about EUR 3 billion and we employ some 8000 people. The Ahlstrom-Munksjö share is listed on the Nasdaq Helsinki and Stockholm.