ÅR Packaging cancels divestments

ÅR Packaging’s tobacco packaging operations and its Russian facilities were to be acquired by Mayr-Melnhof Karton, with the specialties and food packaging operations, consisting of Flextrus and Å&R Carton Lund, to have been divested to Weidenhammer Packaging Group.

Both of the deals have now been canceled due to the failed sale of the tobacco business.

ÅR Packaging is owned jointly by Ahlström Capital, funds managed by Accent Equity and its management.

Harald Schulz, president and chief executive officer of ÅR Packaging Group, said: ‘As the divestment of ÅR Packaging will not happen, the shareholders of ÅR Packaging Group have made a clear future-oriented decision to further develop the company.

‘Development measures taken in the last few years have left ÅR Packaging considerably more competitively positioned in the market, and the year 2013 proved to be a very strong year for ÅR Packaging.

‘This forms a solid base for moving the company further. We are convinced that we can further strengthen and develop the company in accordance with our strategy together with our fantastic staff, customers and suppliers. We thank our customers, suppliers and employees for their patience and continued belief in the ÅR Packaging Group.’

At the time of the news of the divestment in November 2013, Panu Routila, president and chief executive officer of majority shareholder Ahlström Capital Oy, said: ‘The European paperboard packaging industry is in a consolidation process. There is strong business logic behind these transactions, and we are confident that the operations of ÅR Packaging will have matching synergies with its acquirers.

‘Ahlström Capital has been a long-standing owner of ÅR Packaging, and we are pleased that the operations of ÅR Packaging will in the consolidating market have owners with strong capabilities to develop the businesses further. Thus, we truly believe that the transactions will be an advantageous solution for the ÅR Packaging employees, customers and suppliers.’

After the announcement that the divestment program had been canceled, Routila said: ‘Ahlström Capital will continue as an active shareholder of ÅR Packaging Group with the other current owners of the company.

‘After development measures taken, especially in 2012, ÅR Packaging is considerably more competitively positioned in the market than before. Year 2013 proved to be a very strong year for ÅR Packaging, which forms a solid basis for developing the company further.’

Mayr-Melnhof Karton had described the acquisition as having ‘high consolidation potential’ that would allow for ‘attractive value creation’, but said the deal had been canceled due to ‘changed circumstances’, with its chief executive officer Dr Wilhelm Hörmanseder saying: ‘Conserving value for our shareholders remains a priority also throughout the consolidation. We will continue our course of expansion with verve and due care.’

Weidenhammer is also planning to continue its growth plans despite the cancelation of the divestment, with group managing director Ralf Weidenhammer saying: ‘This decision will have no effect on the development of our overall business as a corporate group. In the past year, we successfully expanded our business with composite cans and in-mold label plastic containers. We’ve seen that our modern, high-quality barrier packages are in high demand, especially for food products, as a result of which we are growing in all markets.

‘We plan to continue that growth in 2014 and the years to come.’

Graphic Packaging acquired the beer and beverage operations of Å&R Carton in late 2012 as part of a program to extend its footprint in Europe, alongside the purchase of Contego Cartons in a move to create one of Europe's largest folding carton packaging businesses.

Graphic Packaging recently detailed the positive impact these acquisitions had had on its financial results and in creating ‘a platform for continued growth and market share gains in Europe’.