SCA sells off Asian packaging business

By Rory Harrington

- Last updated on GMT

Related tags Corrugated box plants Box

SCA announced it has signed an agreement to sell its Asia packaging operations to International Paper for US$200m.

The Sweden-based packaging giant told that it had sold off its15 plants in China, Singapore, Malaysia and Indonesia to focus on growth of its hygiene products in Asia.

“The Asian market is a very fragmented one and we are exiting from it in order to concentrate on the company’s core competencies,”​ the SCA spokesman said. “We announced our intention some time ago and it was just a case of finding the right buyer at the right price.”

In 2009, the operations, which employ 4,500 workers, reported sales of US$250m and had a capacity of 537,000 tonnes.

SCA said the fact that it did not have the market leading position in Asia was also a contributory factor in the divestment.

“The situation in Europe is quite different where we are a market leader,”​ said the spokesman. “There are no obvious synergies between our Asia packaging operations and European ones.”

The deal is expected to be completed during the second quarter 2010 – subject to the approval of the appropriate competition authorities. It will be settled in cash and will result in neither capital gain nor capital loss, said the company.

International Paper said the bulk of SCA’s Asian business was in China, consisting of 13 corrugated box plants and two specialty packaging facilities. The move would serve to consolidate its own position in the region.

"We're buying good facilities at a good price as well as gaining an excellent team of 4,500 employees,”​ said International Paper Asia president Paul Brown. “SCA's facilities complement our existing converting system of 12 corrugated box plants, which are principally in China. The combination strengthens our packaging business in Asia and will make it more competitive, more profitable and better able to serve customers."

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