Mayr-Melnhof Group (MM) snaps up Essentra Packaging in a US$382M deal

UK – Austrian cartonboard and folding cartons giant Mayr-Melnhof Group (MM) has agreed to purchase Essentra packaging business unit in a deal worth US$382.4 million.

The acquisition is subject to various conditions, including a shareholder vote for Essentra, and is set to complete in Q4 2022.

Essentra will use the proceeds from the sale to strengthen its balance sheet, as well as allocate a certain amount to its defined benefit pension schemes.

Essentra chief executive Paul Forman said: “The sale of Packaging marks a significant step on our journey to become a pure-play components business.

“I am sure that the business will continue to make excellent progress under the ownership of Mayr-Melnhof.”

The deal is intended to expedite MM Packaging’s strategy to grow its profitable segments, which include pharmaceutical secondary packaging.

It will also help expand the company’s footprint in the European pharmaceutical market as a manufacturer of folding boxes and leaflets.

In addition, Essentra Packaging will expand MM’s presence in the US market, particularly in the East Coast region’s pharmaceutical sector.

MM CEO Peter Oswald said: “For us, the acquisition of Essentra Packaging is a game-changer in the profitable, resilient and growing market for pharmaceutical packaging.

“We have identified attractive upside potential and synergies and are well-positioned to master the integration challenge. The merger is an excellent complement to our current position and will enable more innovations for sustainable packaging solutions in the pharmaceutical sector.”

the sale and purchase agreement follows Essentra Packaging’s impressive sales report in 2021 that recorded £370 million (US$454.90 million) from its 21 manufacturing sites in 10 countries in Europe and North America.

MM Group expects higher Q2 and HY1 earnings

Meanwhile, Austria’s company expects post-operating earnings in the range of US$159-212 million for the second quarter of the current year following US$117.48 million in the first quarter.

The figures would potentially yield earnings in the range of US$275-328 million for the first half of the current year.

In the first quarter of 2021, MM posted an operating profit of US$64.56 million followed by US$32.81 million in the second quarter of 2021, resulting in an operating profit of US$97.37 million for the first half-year of 2021.

The profit-and-loss statement for the first half-year and the second quarter of 2022 would particularly reflect the consolidation of the MM Kwidzyn and MM Kotkamills board and paper mills that the group acquired in August 2021, the group explained.

MM, however, cautions that the earnings expectation is based on current estimates amidst sustained and pronounced uncertainties in the supply chain.

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