Kotkamills

Manufacturer of high-quality specialty papers and wood-based products.

Kotkamills was established in 1872 as a Norwegian sawmill and grew to become a producer of sawmill by-products, laminate papers, and specialty papers for the publication industry
Headquartered in Kotka, Finland
500 employees

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Acquired:

July 10, 2010

Transaction Type:

Corporate Carve-out

Industry:

Packaging, Paper, & Specialty Materials

Headquarters:

Kotka, Finland

Source:

Competitive Auction Process

Buyer:

MB Funds

Status:

Exited

Realized:

March 24, 2019

Transaction Highlights

OpenGate sourced the deal in February 2019 through its technology-focused business development efforts and its long-term relationship with Lincoln International in New York.

Investment Merits:

Corporate carve-out of non-core asset from seller
Motivated seller under pressure to divest assets as part of a larger strategic directive
Strong brand name in the European and global markets
Opportunity to improve operational efficiencies and increase profitability by centralizing the laminate, wood, magazine paper and timber businesses
One of the largest global producers of laminates and plywood, a global market leader in laminating papers
Niche positioning within the magazine paper business
Long-standing customer base includes the largest publishing companies in Europe and North America (Roularta, Conde Nast, Lagardere, Axel Springer)
Fully integrated business converting raw materials into lumber, pulp, laminates and specialty papers
Experienced but inefficient organization and management team
Well-maintained/adequately funded asset base with the opportunity to reorganize manufacturing processes to achieve higher margins
Potential to increase volume in all business lines by implementing a dedicated sales force

Value Creation

Formed a new management team and standalone organization
Appointed key senior managers, including President, VP of Operations, Director of New Business Development and Sales and Technical personnel
Implemented a new IT ERP system
Diversified raw material and service supplier base and renegotiated supply agreement with former owner
Implemented a cost optimization program through a planned workforce reduction
Oversaw rationalization of product portfolio and implemented a factory improvement plan, which increased machine efficiency and energy savings
Struck agreement with Powerflute to acquire a 10% shareholder position within Kotkamills, which provided cash for growth
Developed new environmentally friendly products to serve as alternatives to existing, highly regulated products
Grew EBITDA from – €2.5 million to €16.0 million through high-margin laminating papers that experienced a 17% increase in volume