Smurfit Kappa bought INPA and Paema, two private integrated packaging companies that combined have three recycled corrugated cardboard factories with a total capacity of 210,000 tons and four corrugated cardboard plants that service the northeast of Brazil, through the regions of Rio and Sao Paulo, and the south. The net assets of INPA and Paema by September 30, 2015 stood at $30 million and $6 million Euro, respectively.
The size and location of the combined operations make this group the largest pan-regional supplier of corrugated cardboard in Latin America. SKG will also improve both companies through the application of the best operating systems, design, and innovation capacity of the group. Moreover, thanks to their widespread global presence, the group will be able to increase its packaging offer to the multinationals operating in the Americas.
These two companies employ more than 1,700 people and currently the group expects to generate synergies of approximately 6 million Euro by the end of 2017, mainly through operational improvements and the optimization of the supply chain with the integration of the companies. As a result, they expect that the post-synergies combined business' 2015 EV/EBITDA index amounts to 6.3 times.
The transaction was completed in late December 2015 and it will generate increased earnings immediately. The transaction was financed by the Groups liquidity, comprising mainly of cash resources and available credit facilities.
Tony Smurfit, CEO of Smurfit Kappa Group, stated: "We are pleased to announce the acquisition of INPA and Paema, which will extend our reach to a market of strategic importance, benefiting our geographic diversity and strength. We look forward to welcoming your experienced teams to the Smurfit Kappa Group soon. We are confident that their expertise and the high quality of their asset base will provide us with a strong point of entry into the Brazilian market and, as the leading pan-regional operator in Latin America, it will further strengthen our service offer to our existing international clients."