Significant Acquisition Expands Private Equity Firm’s Holdings in EU; Offers Value-Creation Potential through Product Launches, Operational Stabilization, Growth
Los Angeles, CA and Paris, France – April 22, 2010 – OpenGate Capital, a global private equity firm, has signed a definitive agreement to acquire the Kotkamills division of Stora Enso, a leading manufacturer of wood and paper products based in Finland, for a total consideration of up to €24 million in cash and earnouts. Kotkamills sells high-quality specialty paper, paper-laminates and wood-based products to the laminate, plywood, construction and magazine industries around the world and is recognized for its strong manufacturing capabilities. The transaction also includes Stora Enso’s laminating paper operations in Malaysia and the business operations of the Tainionkoski paper machine 7, which will remain in Stora Enso’s ownership, but will be leased to OpenGate. The deal is expected to close during the second quarter of 2010.
“The Kotkamills acquisition will provide OpenGate with exciting value-creation potential through an operational stabilization, product enhancements and expansion opportunities,” commented Andrew Nikou, CEO of OpenGate Capital. “As a stand-alone entity within our portfolio, Kotkamills will work with our team to refine its production, accelerate the launch of its new products, and extend the breadth of its global footprint. We view the transaction as a platform investment in the wood and paper industry, which experienced difficulties in the recession, yet now offers substantial upside as the market recovers. To unlock this value, we will guide Kotkamills to grow both organically and through acquisitions, capitalizing on its strong production infrastructure and broad customer base.”
OpenGate focuses on investing in spin-offs and divestitures from leading global organizations such as Stora Enso, a multi-billion dollar publicly traded Finnish company. Kotkamills, which holds leading market positions within its key territories, has operated as a division of Stora Enso for decades.
The Mill produces well-known brands including saturating base kraft (SBK) paper under the brand Absorbex, impregnated SBK under the brand Imprex, machine finished coated magazine paper under the brand Solaris as well as sawn and planed wood. Principally operated out of Kotka, Finland near Helsinki, Kotkamills generates approximately €250 million in annual revenue, employs about 570 people and produces positive earnings before interest and taxes (EBIT), which adds to its investment appeal.
European partners Robert Lezec and Julien Lagrèze led the transaction for OpenGate Capital. Lezec added, “We were attracted to Kotkamills’ top position in niche markets, wide portfolio of high-quality products and production capabilities. Kotka has invested heavily in research and development during the past few years, which yielded a pipeline of innovative products that we will help the company to launch. Its well-established and respected brand and more than 500 customer relationships are impressive, and will serve as a solid foundation for growth.”
Lagrèze concluded, “This sizeable transaction is important to our European portfolio holdings and further demonstrates OpenGate’s disciplined investment approach. We remain committed to our successful strategy of acquiring businesses around the world that are established divisions of leading global organizations such as Stora Enso. While we are agnostic about the industry, we are fastidious in ensuring that we can create measurable value for our investors in every transaction. Kotkamills is an example of the right kind of investment for our portfolio.”
OpenGate Capital has been very active in 2010, with additional global acquisitions of NICOLE FARHI and Philips Business Communications. The firm expects to complete other acquisitions in the coming months. OpenGate also owns several businesses in the global publishing arena, including TVGuide and Fleurus Presse, and will explore opportunities for commercial synergies between Kotkamills and these media portfolio companies.