Huhtamaki has agreed to buy assets of China-based Jiangsu Hihio-Art Packaging in a €27m ($32.5m) debt-free transaction.

Jiangsu Hihio-Art manufactures paper bags, wraps and folding carton packaging for international quick-service restaurants and national bakery chains.

The acquisition will allow Huhtamaki to increase its product portfolio in China and build its position as a foodservice packaging provider in Asia.

Huhtamaki Europe, Asia and Oceania (EAO) fibre foodservice president Eric Le Lay said: “I am excited with the opportunities that this acquisition represents for our core business in China.

“Middle-class expansion, urbanisation and innovation into more sustainable packaging solutions all drive growth across Asia.

“The acquisition of Jiangsu Hihio-Art Packaging extends our product portfolio and access to new channels, enabling us to accelerate growth in China in line with our strategy.”

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The deal is expected to be completed by the end of the third quarter of this year, subject to customary closing conditions.

Once the deal is completed, Jiangsu Hihio-Art will fall under Huhtamaki’s Foodservice EAO reporting segment.

Jiangsu Hihio-Art currently employs around 200 people in its manufacturing facility in Xuzhou city, Jiangsu. These employees will have the option to continue working for Huhtamaki after the acquisition.

Last year, Jiangsu Hihio-Art reported almost €20m ($24.07m) in annual net sales.

Following the acquisition, Huhtamaki will have four manufacturing units in China, located in Guangzhou, Shanghai, Tianjin and Xuzhou respectively.

Last May, the company partnered with international charity WasteAid for circular economy innovation.

In their €900,000 ($1.1m) partnership, the two parties agreed to promote waste management solutions at the community level in Vietnam, India and South Africa over a two-year period.

The project, funded by Huhtamaki, will enable WasteAid to educate and train local communities via a Cloud-based learning platform.