Smurfit Kappa to acquire US Bates Container for $150m

By Jenny Eagle

- Last updated on GMT

The team at Bates Container
The team at Bates Container

Related tags Smurfit kappa group Corrugated fiberboard

Smurfit Kappa has agreed to acquire Bates Container, a non-integrated corrugated packaging manufacturer in the US.

Bates is a corrugated box manufacturer which employs 320 people in Texas. Approximately 135,000 tonnes of containerboard requirement will be supplied by Smurfit Kappa Orange County’s (‘SKOC’) containerboard mill in Dallas.

Complements SKOC

The transaction, which will be immediately earnings accretive, will involve an initial consideration of $150m with a further estimated deferred payment of $7.5m.

Tony Smurfit, COO, Smurfit Kappa Group said the acquisition complements its integration of SKOC, which was acquired in December 2012.

The acquisition provides us with substantial scope for further synergies in both businesses. These synergies will be primarily delivered through additional integration of the containerboard needs of Bates into SKOC’s 350,000 tonnes recycled containerboard mill, with additional savings expected through a range of operational efficiency measures​,” he said.

The Group’s enlarged packaging footprint in the US will further enhance SKG’s capacity to provide insight-led and value enhancing packaging to both current and prospective customers​.”

Fourth quarter

The acquisition is expected to complete in the fourth quarter of 2014 subject to customary regulatory approval, with funding from existing cash reserves.

The pro forma 2014 EBITDA for Bates is expected to be $18.5m and the Group has identified synergies of $11.5m, which it expects to deliver within 24 months of completion. Inclusive of synergies, the transaction will carry a pro-forma multiple of 5.25 times EBITDA.

Gary McGann, CEO, Smurfit Kappa Group, said he was looking forward to welcoming the excellent team from Bates into the Smurfit Kappa Group.

The transaction reflects our continued focus on the accretive growth of our operations in the Americas and the combination of SKOC and Bates will increase our market presence and provide us with higher quality earnings in this region​,” he added.

Related topics Processing & Packaging

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