Nippon Paper Industries (Nippon Paper) has announced an agreement with Orora Limited to acquire its Australia and New Zealand fibre packaging division. The contract was signed following the Nippon Paper board of directors meeting held in Tokyo, Japan. The purchase will be subject to final approval from the relevant authorities and is expected to be completed by the end of March 2020. Source: Timberbiz
The $1.72 billion acquisition will be made through a newly incorporated subsidiary of Australian Paper, a wholly owned subsidiary of Nippon Paper. The purchase includes the Botany Paper Mill, corrugated box converting, specialty packaging, folding cartons, sacks and bags, WRS packaging distribution and associated businesses.
According to Australian Paper this will build on its strong position as a local manufacturer for the growing fibre packaging market.
IndustryEdge’s headline view is that this transaction is overdue from a rational stand-point. The re-integration of the supplies of container board materials must be expected to deliver synergies and unlock value. The re-integration comes about as Australia is in the midst of a deep and increasingly distressing drought.
According to IndustryEdge, the sale of Orora’s Australasian fibre business means that after almost 20 years of separation, Australia will once again have two fully integrated fibre packaging suppliers. The other is the privately-owned Visy, which is the clear market leader in the corrugated box market in Australia.
The acquisition of Orora’s fibre packaging division is aligned with Nippon Paper’s strategy to expand through packaging as one of its key focus areas and Australian Paper’s mission of sustainable growth for the next generation.
“As a major domestic packaging paper manufacturer, we are positioning our operation for ongoing success in this growing sector. With the acquisition, Australian Paper will improve our ability to meet emerging customer needs,” said Mr Peter Williams, Australian Paper’s Chief Operating Officer.
“The Orora fibre packaging business is a strong fit with our existing operation and provides an opportunity for Australian Paper to broaden its value proposition. The two companies have a long-standing successful business relationship based on the supply of kraft linerboard and bag and sack papers.
“This will allow us to expand into new sectors such as box and carton manufacture along with paper bags and sacks, and other specialty products bringing us closer to end markets,” Mr Williams said.
The Nippon Paper purchase of Orora’s fibre packaging business is subject to regulatory approvals and will take time to be finalised.