Smurfit Kappa to offer €90m for remaining shares in Colombian unit

Cardboard box-making group Smurfit Kappa has launched a €90 million offer to buy the 30.1 per cent stake it doesn't already own in its Colombian operation.

The Dublin-based company said on Thursday that minority investors in Carton de Colombia who hold about 15.4 per cent of the stock have agreed to sell their shares as part of the planned transaction.

The company intends to fund the deal using “existing cash resources”, it said in a statement, adding that the transaction is expected to be completed by the end of June, subject to approval from Colombian authorities. Smurfit Kappa acquired a controlling stake in the Colombian business 30 years ago.

The move comes as Smurfit Kappa weighs developing a large paper facility in Colombia, which may cost between €200 million and €400 million. Group chief executive Tony Smurfit said last month that a decision on the investment, which would be the group's largest ever such project, will be made this year.

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Smurfit Kappa said 13 months ago that it plans to spend €1.6 billion expanding its operations and buying rivals over the space of four years. Its largest deal of 2018 was its purchase of Dutch company Reparenco for €466 million. It also sealed smaller deals in France and Serbia.

Venezuela

Smurfit Kappa was forced to write down its remaining €60 million of net assets in neighbouring Venezuela last year after the Caracas government seized its local business.

The group took a €1.3 billion non-cash charge relating to the deconsolidation of Venezuela, pushing it into a pretax loss of €404 million for 2018, compared to a €576 million profit for the previous year.

Smurfit Kappa submitted a request for arbitration with the World Bank’s International Disputes in December against Venezuelan president Nicolas Maduro’s government, saying it is seeking compensation for the seizure of SKCV “as well as for other arbitrary, inconsistent and disproportionate” measures that have “destroyed the value” of its local investments.