SKG CEO Gary McGann said the acquisition delivers immediate earnings growth for the group and bolsters its existing position in the Mexican market.
"The continued strength of our operating performance and consequent net debt reduction has increased the range of strategic and financial options for the group," McGann said.
According to Ireland-based SKG, the transaction will allow the group to transfer some of its European recycled containerboard and corrugated innovation and production experience to the OCCG mill and corrugated operations.
With the acquisition of recovered paper system in the southern part of the US, SKG will support the security of its raw material and paper supplies to its expanding Mexican packaging business by increasing its hold on substantial tonnage of the raw material.
The transaction, which is expected to conclude in the fourth quarter of 2012, complements SKG’s Mexican business with limited customer or geographic overlap, and provides the group with a pro-forma total market share of about 17% of the Mexican market.
SKG’s Mexican business interests include three paper machines and nine box plants with containerboard production of about 295,000t, and corrugated shipments of 500 million cubic metres.
Upon completion, the deal is expected to be earnings per share (EPS) accretive, and the OCCG business will be integrated with the SKG’s operations in Mexico.
OCCG has eight packaging facilities in Mexico consisting of two box plants, three sheet plants and three fulfilment centres; seven distribution centres in Mexico and two packaging facilities in southern US comprising one box and one sheet plant.
The OCCG business, which also has assets including a 290,000t recycled containerboard mill in the southern part of the US, has a US-based recovered paper collection system.
For the full year 2012, OCCG is expected to generate $53m of earnings before interest, taxes, depreciation, and amortisation.
Image: Smurfit Kappa will acquire corrugated and containerboard manufacturer OCCG for $340m. Photo: nuttakit