Munksjö and Ahlstrom are to merge, creating a global leader in sustainable and innovative fiber-based products, more than 90 percent of which are produced from renewable fibers, with leading global positions in the main product areas of release liners, décor and filtration, plus specialty products used for, among others, building and wind applications, medical care, hygiene and food packaging.
Preliminary combined annual net sales will be approximately 2.2 billion EUR (2.3 billion USD), with adjusted EBITDA of 249 million EUR (265 million USD). The combined company will have approximately 6,200 employees and 41 production and converting facilities in 14 countries.
Munksjö and Ahlstrom are both focused on sustainable and innovative fiber-based products. The companies have also had a jointly operated site in Turin, Italy since the business combination of Munksjö AB and Ahlstrom’s Label and Processing business in 2013. In recent years, both companies have focused on streamlining operations and improving operational efficiency with clear results.
The combination is described as a ‘natural next step’ in the development of the two companies as it has a strong strategic logic and is expected to improve competitiveness. The combination is also expected to increase and create new growth opportunities through the complementary customer bases, product portfolios and geographical footprints of the two companies. The companies further believe that by combining their operations they can achieve further efficiency improvements as well as benefits of scale in the capital markets in the form of increased liquidity, investor interest and analyst coverage.
The combination will be implemented as a statutory absorption merger whereby Ahlstrom will be merged into Munksjö. The combined entity, which will provisionally be called Ahlstrom-Munksjö with a new name to be proposed by the time of completion of the combination, has obtained underwritten financing for the merger from Nordea and SEB. The merger is expected to create significant value for the stakeholders in the combined company through stronger global growth opportunities and improved operational efficiency. The combined company’s growth ambitions will be supported by a strong balance sheet and strong cash flow generation.
Peter Seligson, chairman of the board of Munksjö, commented: ‘After the very successful integration of our acquired businesses during the past years and strong operating performance, the combination with Ahlstrom is a natural first step in the execution of our growth strategy, combining two leading businesses into one strong engine for performance and growth. The combined company will be positioned for strong long term-financial returns partly through the significant communicated cost synergies but mainly through enhanced future competitiveness and growth opportunities.’
Hans Sohlström, chairman of the board of Ahlstrom, continued: ‘During the past two years the Ahlstrom management has executed a very focused and successful business turn around by shedding costs and by focusing on commercial excellence with new products and value adding solutions for our customers. The financial results speak for themselves. The combination now enables us to directly jump into a growth mode with a much stronger balance sheet and greater earnings potential which will benefit our shareholders and our customers as well as other stakeholders. We will together be able to leverage several strategic advantages and we will focus on shareholder returns through increased profits as well as profitable global growth initiatives in the area of sustainable and innovative fiber-based solutions.’
Munksjö president and CEO Jan Åström added: ‘Munksjö and Ahlstrom are two solid and profitable companies with strong cash flows that already today have attractive positions within their respective businesses. Together we will form an even stronger growth platform supported by the cost synergies identified but also by the added top line opportunities. The offerings and market presences are complementary, enabling us to offer our customers a broader range of solutions with a truly global reach. Our collective quality leadership, know-how and innovation capacity will add further value to all customers. About 90 percent of the combined company’s products are made from renewable fibers, which will be increasingly important for our sustainability ambitions and footprint going forward.’
The completion of the combination is subject to, inter alia, approval by the extraordinary general meetings of Munksjö and Ahlstrom, which are expected to be held on January 11, as well as merger control approvals from relevant competition authorities. The merger is expected to be completed in the beginning of the second quarter of 2017.
A combined management team for the merged business has been outlined, including Seligson, Sohlström and Åström. It is detailed in full here.