The Jefferson Smurfit Group is to increase its stake in Austria's publicly quoted, corrugated case manufacturer, Nettingsdorfer, from 27.5 per cent to 75 per cent, at a cost of £54 million.
The stake is being purchased from NPF-Holding Aktiengesellschaft (NPF) and from the shareholders representing the 10 per cent which is quoted on the Vienna Stock Exchange. When the deal is finalised, towards the end of October, NPF will retain the other 25 per cent. Trading in Nettingsdorfer's shares were suspended on the Vienna bourse yesterday, prior to the announcement. They closed the previous day at 380 schillings after starting the year at 201 schillings.
Smurfit will be offering the minority shareholders 500 schillings per share in August. The offer is being made through a holding company, involving the two partners, so the outstanding shares can be compulsorily acquired. The NPF 25 per cent will be subject to a put and call option arrangement with Smurfit. This, however, will not come into operation until 2003 and, if exercised, Smurfit would end up with a 100 per cent stake.
Smurfit's stake in the Austrian group has proved to be very profitable. It acquired its initial shareholding in 1995 for £20.5 million, valuing the company at £74.5 million. Now, three years later, it is valuing Nettingsdorfer at £113.7 million, or 52.6 per cent higher than in 1995. The Austrian company generated a profit before tax of £16 million, on sales of £210 million in 1997. Net assets amount to £58 million. The deal will not have any material affect on Smurfit's earnings. Mr Pat Barrett, chief executive Smurfit Europe, said the group's investment in the Austrian company "has been extremely successful and we are happy to increase our stake in this high quality company, which strengthens our operational base in central Europe".
In addition, the Nettingsdorfer mill "complements our other major European kraft mill in Facture, France, with the result that we will control the two largest mills in Europe outside Scandinavia".
Nettingsdorfer operates a large kraft liner mill near Linz in Austria, producing 400,000 tones of kraft liner and other grades of corrugated case making materials, according to Smurfit. Its other interests include a plant in Austria producing 43,000 tonnes, and a majority stake in four plants in Italy producing over 200,000 tonnes.
It has a 40 per cent stake in Duropack (the Austrian Constantia Group controls the company) with plants in Austria, Germany, the Czech Republic, Hungary, Slovakia and Slovenia with total production of 240,000. Nettingsdorfer also has a 50 per cent shareholding in a small plant in Malta. Asked about increasing the group's stake in these two businesses, Mr Barrett said there are no plans to do so.
