CCL to merge Euro and Asian operations with Steinbeis

CCL Industries Inc has announced its intention to merge its European and Asian label operations with Steinbeis Packaging, the label operations of Steinbeis Holding. Steinbeis Packaging, based in Holzkirchen, Germany supplies battery labels on a global basis and provides premium product decoration solutions for the European consumer products market.

CCL will hold a significant controlling interest in the new company and contribute its label operations in the UK, France, Denmark, Thailand and the Netherlands as well as its new greenfield site currently being established in Poland. CCL-Pachem, CCL's 51 per cent controlled joint venture with plants in Austria, France and the UK, will become a wholly-owned subsidiary of the venture with its founders Guenther Birkner and Thomas Summer taking leading roles in the new company.

Steinbeis will contribute the value of its operations in Germany, France, the USA and China to the new venture. However, the Steinbeis battery label plant in the USA, with revenues of approximately Cdn $25 million, will subsequently become a wholly-owned subsidiary of CCL Label Inc. in the United States.

The new company will focus on continuing to build a network of European and Asian label manufacturing facilities dedicated to serving large global customers in the consumer products, healthcare and premium food and beverage markets. This will include capital investments of Cdn $15 million to build new factories in the fast growing markets of Eastern Europe and China.

Geoff Martin, President of CCL Label will assume the role of CEO in addition to his North American responsibilities. Sales of the new venture in Europe and Asia are approximately Cdn $325 million with 2004 EBITDA estimated at approximately Cdn $40 million, making it the largest label converting group in the European and Asian markets.

Donald Lang, president and CEO of CCL Industries commented: 'We are very pleased to continue building our global position in the highly fragmented label industry. Through our pooling of interests, this transaction accelerates CCL's label strategy and will give the new company the financial strength to continue investing, while bringing to us one of the most respected label businesses in Europe as our partner. We look forward to a long association with the Steinbeis family and their contributions to our new venture.'

Michael Steinbeis, Chairman of Steinbeis Holding added: 'Steinbeis Packaging has been a pioneer in the European label industry for nearly 50 years and we have built an important group with sales of Cdn $150 million during that time. This transaction now gives the management and employees of Steinbeis Packaging the opportunity to play a major role on the global stage. We are particularly pleased to become a part of the largest company in the industry
worldwide.'

Geoff Martin, president and CEO of the new venture said, 'This venture, coupled with the new investments in Eastern Europe and China, will give CCL Label more than 30 sites worldwide in our network and total revenues of more than Cdn $700 million. We will continue to operate as a global label company dedicated to our largest customers in the consumer products and healthcare markets. However, we will also maintain our philosophy that local management with the autonomy to execute day by day for our customers, close to their facilities in whichever part of the world we are needed, is the only way to be successful in this business.'

The transaction is subject to the approval of both Boards of Directors, certain regulatory approvals, legal and financial due diligence and the execution of definitive agreements. Closing is anticipated at the end of 2004.