AR Packaging acquires European tobacco folding carton business from MeadWestvaco

AR Packaging Group has acquired MeadWestvaco’s Europe-based tobacco folding carton business as it looks to further its plan to expand in profitable segments.

AR Packaging group includes AR Carton

MeadWestVaco’s European tobacco folding carton business specializes in the manufacture and printing of hinge-lid boxes, display cartons and high-impact cigarette packaging, as well as folding carton packaging for some chocolate confectionery and consumer apparel segments.

It operates three manufacturing facilities in Graz in Austria, Krakow in Poland and Moscow in Russia, which have a total of 680 employees.

Also included in the sale is the tobacco and confectionery folding carton business currently served by MeadWestvaco’s plant in Svitavy in Czech Republic. The Svitavy plant will remain part of MeadWestvaco beyond the transition period.

AR Packaging is a maker of paperboard cartons, flexible packaging and trays, with AR Carton, Flextrus, SP Containers and CC Pack making up the group, and is based in Lund, Sweden. One of the key elements in the AR Packaging business plan is to expand in profitable segments where the company has a competitive edge.

In February last year, AR Packaging canceled deals to sell its tobacco, specialties and food packaging businesses, with shareholders committing to developing the company further.

This new acquisition will give AR Packaging the opportunity to further strengthen its cooperation with key tobacco customers, as well as enhance its strategic position at key accounts in the confectionery and consumer goods segment.

The geographical coverage of AR Packaging will also improve with a stronger presence in countries well positioned to serve the eastern and south-eastern part of Europe with short lead times.

Harald Schulz, president and chief executive officer of AR Packaging, said: ‘This acquisition is a clear message to the market that AR Packaging is a strong and significant long-term packaging supplier. The company is a key driver of the consolidation process in the European carton packaging industry.

‘[With this acquisition] we establish an even stronger position as one of the leaders in the tobacco segment and also on the total European folding carton scene, and will be elevated to a top three position in Europe with a net revenue of approximately 550 million EUR (597.5 million USD).

‘We will continue deploying our ambitious development plan for the company and I am pleased to make this plan happen together with my team.’

MeadWestvaco will continue to produce high-quality solid bleached sulfate paperboard for global tobacco end markets at its paperboard mill in Covington, Virginia.

Joe McNamara, president of MeadWestvaco’s tobacco business, said: ‘MeadWestvaco has long been – and remains – committed to our customers in the global tobacco market. This transaction gives us the opportunity to further focus our participation on our leadership position in high-quality paperboard for tobacco and other premium packaging markets around the world.

‘Our strong teams and facilities in the folding carton space will flourish as part of AR Packaging, and MeadWestvaco will continue to serve our global customers as the market for high-quality paperboard grows in many regions.’

In another development, MeadWestvaco and fellow packaging firm RockTenn are to merge, with the transaction to close sometime in the second quarter of 2015.