International Paper to sell Turkish corrugated packaging operations to Mondi

International Paper will no longer produce
corrugated packaging in Turkey
05 Jan 2021 − 

International Paper plans to exit the Turkish market. The company will part with its five corrugated packaging plants in the country.

International Paper (IP) has followed through with its plans to part with its packaging operations in Turkey. The company announced it had entered into an agreement to sell its 90.38 per cent ownership interest in Turkish corrugated packaging company Olmuksan International Paper to the Mondi Group. The transaction price was put at €66m. The sale is still subject to certain approvals and closing conditions and is expected to be finalised in the first half of 2021.

Once the transaction in completed, Mondi said it intended to launch a mandatory tender offer to acquire the remaining outstanding shares in Olmuksan. At the moment, International Paper holds a 90.38 per cent stake through IP Container Holdings Spain while the remaining 9.62 per cent are in free float.

Olmuksan is the corrugated packaging arm of IP in Turkey. The business includes five corrugated board and packaging facilities across the country with a total capacity of 350 million m², which according to IP generate annual sales of approximately TRY1.09m (€120m). The company employs over 800 people and serves customers in the agriculture, food, heavy duty and industrial sectors.

With the move, Mondi wants to strengthen its position on the Turkish corrugated market, which it considers a fast-growing market. Mondi is already active in the country and operates four corrugated packaging plants, a recycled containerboard mill as well as three flexible packaging sites there.

Turkish business posts loss in first half of 2020

In October last year, IP had announced it was considering "strategic options" for its Turkish operations which included a possible sale of the business. Olmuksan has been in the red for some time. After a net profit of TRY14.2m (€1.6m) in 2018, the company slipped into the red in 2019, generating a net loss of TRY92.1m (€10m). In the first six months of 2020, results improved but were still negative, with the net loss amounting to TRY29.7m (€3.3m) for the period.

IP's corrugated packaging operations outside of Turkey are not affected by the measure. "Corrugated packaging remains a strategic business for International Paper in EMEA," the company said.

The company's focus on its packaging operations has also become clear by an announcement made at the end of last year. IP reported it would spin off its printing papers segment to make it a standalone, publicly traded company. The separation is expected to be finalised during the third quarter of 2021. The group explained it wanted to sharpen its focus on the industrial packaging business in North America, Europe, the Middle East and Africa as well as improve the returns of its cellulose fibres business.

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