Norwegian packaging and insulation company BEWI has agreed to purchase paper packaging company Trondhjems Eskefabrikk.

The agreement comes after BEWI entered a letter of intent (LOI) to acquire 100% of the company in February.

Trondhjems Eskefabrikk specialises in manufacturing fully recyclable, fibre-based packaging products and carton boxes for the food industry.

The company uses a ‘significant share’ of recycled fibres as raw materials for its products.

Last year, Trondhjems Eskefabrikk delivered revenue of around €13.5m ($14.62m), an increase from €11.7m ($12.68m) in 2020.

It also reported earnings before interest, taxes, depreciation and amortisation (EBITDA) margins in the range of approximately 18% to 20%.

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BEWI CEO Christian Bekken said: “The acquisition of Trondhjems Eskefabrikk provides us with an extended offering of recyclable and recycled products.

“This is in line with our strategy to provide our customers with complementary solutions (and) at the same time supporting our sustainability target to increase the use of non-fossil raw materials.”

The deal is expected to complete in the second quarter of this year subject to customary conditions.

The financial terms of the transaction will be in line with BEWI’s historical mergers and acquisitions, with an enterprise value and EBITDA multiple of between five and seven.

These will be settled in cash upon closing of the acquisition.

BEWI provides packaging, components and insulation solutions for worldwide markets, with a focus on sustainability.

Earlier this year, the company signed an LOI to acquire 100% of an unidentified Baltic insulation company.

The Baltic company has recorded ‘profitable’ growth in recent years, with net sales of between €25m to €30m and EBITDA margins in the range of 10% to 15%.

The deal is expected to close in the second quarter of the current fiscal year.