SAPPI TRIPLE MILL DEAL COLLAPSES

The proposed deal by papermaking giant Sappi to reduce its exposure to graphic arts papers by selling three of its mills to p/e fund Aurelius in a $400m deal collapsed at the 11th hour.

The deal was generated under the Sappi strategy of reducing its activities in graphic arts papers, and switching them to packaging, speciality papers and pulp. Aurelius is the private equity fund that last week paid €92m for Agfa’s Offset Soluitons business – its plates, equipment, software and services activities.

Under the proposed deal for the mills with an enterprise value of €272m, Aurelius was due to front up a consideration consisting of cash proceeds and retained receivables of €212m, as well as retained liabilities of €60m.

The EBITDA for the three mills – located in Germany, Finland and The Netherlands – to March last year was €58m, which compares with the pre-Covid EBITDA of €40m. Aurelius was expecting sales to be in the region of €1bn.

Sappi CEO Steve Binnie said, “Regretfully, and despite extensive efforts by Sappi to close the transaction the parties could not agree on fulfilling the suspensive conditions.

“Therefore, the transaction has lapsed. Sappi’s strategic focus remains unchanged. This includes reducing exposure to the graphic paper segment while expanding Sappi’s presence in segments including packaging and speciality papers, pulp and biomaterials.”

When Sappi put the mills up for sale last year it said it had received several “binding” offers. It is not yet clear if one of these will be resurrected.