Kraft paper production

Graphic Packaging International will sell non-core assets including nine US multi-wall bag converting plants to international packaging and paper group Mondi Group for $105m.

The deal will also see the sale of Graphic Packaging International’s Pine Buff, Arkansas kraft paper mill which has a production capacity of 135,000t a year.

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The assets generated unaudited pro forma sales of approximately $437m in the 12 months ending 31 March.

Mondi Group chief executive David Hathorn said that the combination of the business with the company’s existing network will create a bags player in North America, while expanding the group’s growing footprint in the market globally.

"I am confident that the synergies expected from the acquisition, coupled with Mondi’s proven expertise as a leading global kraft paper and industrial bags producer, will ensure that the combined business delivers strongly," Hathorn added.

Graphic Packaging chairman, president and chief executive officer David Scheible said that following the sale, the company will transform into a vertically integrated paperboard packaging company.

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"The divestiture will free up valuable resources which we can redirect to further accelerate global growth in our core paperboard packaging business," Scheible added.

Mondi plans to fund the acquisition from existing available resources. The transaction is expected to close in the late second quarter or early third quarter of the year.

Image: Mondi kraft paper production in Sweden. Photo: courtesy of Mondi.