Smurfit Kappa Group has reached an agreement to purchase an integrated packaging business comprising the Fabrika Hartije Beograd (FHB) paper mill and Avala Ada Beograd corrugated plant in Belgrade, Serbia, from Kappa Star Group.

The deal is valued at €133m ($151.12).

Besides expanding Smurfit Kappa’s European geographic presence, the acquisition will provide full containerboard integration in the company’s packaging operations in Southeast Europe.

The acquired facilities will allow Smurfit Kappa to gain a significant market position in Serbia and adjacent countries.

The FHB containerboard mill is equipped with a recycled containerboard machine, which was recently upgraded and has a capacity of 120,000t, with potential for further expansion.

Smurfit Kappa Group CEO Tony Smurfit said: “We are pleased to announce our agreement to acquire FHB and Avala Ada, which will be a cornerstone to the expansion of our business in Southeast Europe.

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“We look forward to welcoming their experienced teams into the Smurfit Kappa Group, and we are confident their expertise and the high quality of the companies’ asset bases will provide us with an excellent platform to grow in the region and further strengthen our European offering for our new and existing customers.”

“Their expertise and the high quality of the companies’ asset bases will provide us with an excellent platform to grow.”

The corrugated plant produces both corrugated and laminated packaging with an existing production capacity of about 110 million square metres.

According to the company, the acquisition of the integrated packaging business represents a pre-synergy multiple of 7.6 times the expected 2018 full year EBITDA.

Smurfit Kappa expects to arrange funding for the transaction from its existing resources.

Subject to certain customary closing conditions, the closure of the transaction is anticipated to take place by the end of the year.

The company has also reported an EBITDA growth of 27% year-on-year to €1.13bn and revenue growth of more than 7% year-on-year.