STOCKHOLM, Nov. 27, 2019 /PRNewswire/ -- Ahlstrom-Munksjö has signed a non-binding letter of intent with the majority shareholders of Hebei Minglian New Materials Technology Co., Ltd. to acquire the company, comprising a state-of-the-art greenfield decor paper plant in the city of Xingtai, Hebei Province, China. The debt free purchase price is approximately EUR 60 million. The letter of intent contains customary exclusivity undertakings on the part of the sellers with respect to the considered transaction. The transaction is subject to further due diligence and final and binding transaction agreements, and it is expected to be completed during the first quarter of 2020.
By combining Minglian with its existing Decor business, Ahlstrom-Munksjö would have a strong presence in the world's two largest decor paper markets and improved cost competitiveness. The deal would allow Ahlstrom-Munksjö to leverage its leading brand and capabilities in the large and rapidly growing Chinese Decor paper market and strengthen Ahlstrom-Munksjö's ability to serve international customers both in the short- and long term. Ahlstrom-Munksjö would provide technical and operational expertise to Minglian and strengthen Minglian's commercial opportunities in the domestic high quality segment and adjacent export markets.
Minglian New Materials was established in 2016 by a group of experienced entrepreneurs with a background in the Chinese decor industry through a greenfield investment in new state-of the art paper machine technology and plant lay-out. The production started at the end of 2018 and the ramp-up has progressed well. The machine capacity is 50,000 tons per year.
"This planned deal is based on strong strategic and financial logic and is evidence of our ambition to create a stand-alone global leader in the decor paper industry. With Ahlstrom-Munksjö's best in class quality, technology and brand leadership we would have a lot to offer to potential partners, while leveraging Minglian's local state-of-the-art production facilities. Through the planned transaction we would gain several years of investment lead time," says President and CEO Hans Sohlström.
Ahlstrom-Munksjö explores strategic opportunities for its Decor paper business
On 17 September, 2019, Ahlstrom-Munksjö announced that it is exploring potential acquisitions, mergers and joint-ventures with decor paper suppliers in China to speed up the execution of its strategy and capture the attractive value-creation opportunity in the decor business. In addition, it was announced that the company is investigating the possibility to attract outside capital investment into the Decor business to further fund such objectives.
About the Decor paper business
A leading decor paper supplier in growing markets
The Decor business area is one of Ahlstrom-Munksjö`s five reporting segments, with net sales of EUR 451.9 million and comparable EBITDA of EUR 37.1 million in 2018. The Decor business produces paper in a wide range of colors, grades and grammages for decorative applications, mainly used in laminated furniture, flooring and interior applications both for technical and esthetical purposes. The production takes place at five plants: Unterkochen and Dettingen in Germany, Tolosa in Spain, Caieiras in Brazil and Arches in France. Annual production capacity is approximately 230,000 tons.
Ahlstrom-Munksjö`s Decor business currently has strong market positions in Europe and the Americas, ranking as the second largest in Europe and the fourth largest in the world. It is the leading brand globally competing with quality and service. It is the only supplier with a dedicated R&D organization, working in close cooperation with the R&D teams of our key customers and main suppliers to innovate and bring added value. It has a diverse product offering and is the global leader in high-end decor paper segments such as solid colors and pre-impregnated papers.
Ahlstrom-Munksjö`s ambition is to develop a leading and profitable position in China, which currently represents the largest and fastest growing decor paper market in the world. The annual demand for decor products is over 900,000 tons in China and close to 600,000 tons in Europe. The market trend growth is estimated at 4-5% p.a. in China and 2-3% p.a. in Europe. The demand is supported by population growth, strong urbanization as well as a growing middle class. Design trends and large investments in efficient wood-panel production globally are also contributing to the decor paper demand growth.
Forerunner in sustainability
Sustainability is a key priority for Ahlstrom-Munksjö and an emerging business driver for the decor industry. Our ambition is to be a forerunner in sustainability and we consider sustainability as a strategic competitive advantage that brings value to customers and strengthens business relationships. Our product offering facilitates a more sustainable everyday life by providing solutions that have better performance, use safer materials, use fewer resources or have a lower impact than alternative materials. Our decor papers are made of FSC certified pulp and are also available without formaldehyde. There is also an ongoing substitution trend within the panel-based furniture industry from plastic coatings to decor paper.
Communications and Investor Relations
Investor Relations Manager
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