Mondi to buy €66m stake in Turkish corrugated packaging firm

Paper and packaging group Mondi has announced its intention to expand its presence in Turkey by acquiring packaging firm Olmuksan.

The company recently resumed dividend payments to shareholders, citing its resilience amid the Covid-19 pandemic.

Mondi has agreed to buy an initial 90.38% stake in Olmuksan International Paper for €66m (R1.2bn), though the deal is still subject to conditions, including approval from competition authorities.

Should this stake be acquired, Mondi will then launch an offer to acquire the 9.62% of remaining shares held by minority shareholders. The implied enterprise value on a 100% basis would amount to about €88m, Mondi said.

Olmuksan, which is listed on the Istanbul Stock Exchange, operates five plants that produce sustainable packaging for food, beverage, agriculture and industrial applications. The business has more than 800 employees, according to information on its website, and was founded in 1968.

Mondi already has a presence in Turkey, including four corrugated packaging plants and a paper mill for recycled containerboard, says it has “developed a strong understanding of the market and its long-term opportunities”.

“We are excited by this unique opportunity to significantly strengthen our position in the fast-growing Turkish corrugated market and expand our offering to existing and new customers in the region,” said CEO Andrew King.

Mondi has not escaped the effects of Covid-19, but said recently the pandemic had boosted demand for some products, such as e-commerce packaging. The group has also cited its sheer size as a benefit as customers sought stable suppliers and made large orders that needed delivery on short notice.

In its most recent update, Mondi reported that earnings before interest, taxation, depreciation and amortisation (ebitda) — a measure of underlying operations profit — fell 20% to €306m in the three months to end-September.

The group, however, paid out €237m during that quarter for an interim dividend it had suspended in April. The group said in October its financial position remained strong, with liquidity of about €970m.

By the JSE's close on Tuesday, Mondi’s share was up 0.71% to R353.83, having risen 7.76% over the past 12 months.

Update: This story has been updated with the closing share price

gernetzkyk@businesslive.co.za