Stora Enso has received regulatory approval from the EU Commission to proceed with the acquisition of De Jong Packaging Group, announced in September 2022. Closure of the transaction is still ongoing and expected to be finalised at the beginning of 2023. The Nordic company acquires De Jong Packaging Group, based in the Netherlands, for an enterprise value of approximately EUR 1,020 million. This acquisition will advance Stora Enso’s strategic direction, accelerate revenue growth and build market share in renewable packaging in Europe. De Jong Packaging Group is one of the largest corrugated packaging producers in the Benelux countries. Its product portfolio and geographic presence will complement and enhance Stora Enso’s offering, especially in fresh produce, e-commerce and industrial packaging.
The acquisition of De Jong Packaging Group will significantly strengthen Stora Enso’s European market presence in corrugated packaging and provide an entry into the Netherlands, Belgium, Germany and the UK. With this acquisition, Stora Enso’s Packaging Solutions division will increase its corrugated packaging capacity by approximately 1,200 million m2 to more than 2,000 million m2, including De Jong Packaging Group’s ongoing expansion projects. This will secure a platform for continued growth in key markets. The European corrugated packaging market is fragmented, with local presence key for sustainable growth.
The enterprise value of the transaction is approximately EUR 1,020 million of which EUR 250 million is IFRS lease liabilities. The enterprise value corresponds to a multiple of 8.9, based on an adjusted EBITDA of EUR 114 million for 2022. In 2025, when the ongoing expansion projects in packaging converting are ramped up, an additional EBITDA of EUR 40 million is estimated to be delivered. In the mid-term, after 3 years, the acquisition is expected to generate average annual synergies of EUR 30 million over the cycle, mainly through sourcing, containerboard integration optimisation and commercial opportunities. If Stora Enso decides to proceed with the currently studied conversion of the Langerbrugge paper production site in Belgium to containerboard, further synergies will be possible. Stora Enso may in 2024, make a maximum additional earn-out payment in cash of EUR 45 million, subject to De Jong Packaging Group achieving certain earnings thresholds.
De Jong Packaging Group’s full year 2022 sales is estimated at approximately EUR 1 billion. The acquisition is expected to be EPS accretive from the first year. The acquisition will be financed through existing liquidity and bilateral loan arrangements. Stora Enso’s net debt to operational EBITDA ratio will increase by 0.4 to 1.4. Closure of the transaction is expected at the beginning of 2023, subject to employee consultation and regulatory approval. Stora Enso’s full year 2022 operational EBIT guidance remains unchanged.
“In line with our strategy, we are investing in growing our market share in renewable and circular packaging solutions. De Jong Packaging has a solid presence in the corrugated packaging sector and an impressive customer base. Acquiring their operations supports our future strategic direction to advance renewable packaging solutions within Europe,” says Annica Bresky, President and CEO at Stora Enso.
“We are excited about this acquisition. With our shared focus on agility and customer value, and with the excellent teams in both companies, we will create a strong platform for future growth. De Jong Packaging Group has a solid track record of growth in corrugated packaging, which combined with our experience in innovative design, digital solutions and sustainability services, will enable us to strengthen our offering,” says David Ekberg, EVP Packaging Solutions division at Stora Enso.
“We are proud of what has been achieved at De Jong Packaging Group and we now look forward to the next steps in our company’s journey. Stora Enso is well positioned to drive further growth in line with our common ambition,” state Henk de Jong, owner of De Jong Packaging Group and Ad Smit, CEO of De Jong Packaging Group.
Founded in 1996, De Jong Packaging Group is one of the largest corrugated packaging producers in the Benelux countries. The company specialises in corrugated trays and boxes mainly for fresh produce, e-commerce and industry. De Jong Packaging Group is also active in containerboard production through the acquisition of the De Hoop paper mill in the Netherlands in 2021. De Jong Packaging Group has 17 sites in the Netherlands, Belgium, Germany and the UK. It employs approximately 1,300 people. The acquisition of De Jong Packaging Group has been approved by Stora Enso’s Board of Directors. Stifel, Allen & Overy, and KPMG acted as Stora Enso’s advisors in this transaction.