Manufacturer and marketer of industrial packaging Stora Enso has entered into an agreement to establish a joint venture (JV) named Bulleh Shah Packaging with Packages of Pakistan, in a bid to extend packaging products to local and international customers in the country's burgeoning market.
Finland-based Stora Enso's initial shareholding will be 35% with a commitment to later increase the shareholding to 50%, subject to certain conditions being met.
Also included in the operations of the JV will be the Kasur mill and Karachi plant, which are both presently owned by Packages of Pakistan.
The joint venture, which will provide employment to about 950 people, is estimated to register sales worth $130m (€99m) in 2012.
Stora Enso renewable packaging business area executive vice president Mats Nordlander said the JV is an example of Stora Enso's investments in value-creating growth markets.
"The Pakistani market, with growing demand for packaging products and paperboard, offers an attractive growth opportunity for us and the joint venture will enable us to increase our capability to serve our key customers," said Nordlander.
The agreed value for 100% of the joint venture company is about $108m (€83m) on a cash and debt free basis, said the company.
To develop the business, both parties are committed to a $135m (€103m) investment programme during 2013 and 2014, according to the agreement.
The transaction of the JV is slated to be completed during the first quarter of 2013, subject to competition and regulatory approval and other customary transaction conditions.
Image: Stora Enso's JV will also include the operations of the Kasur mill and Karachi plant. Photo: Stora Enso.