Sappi acquisition transitions group into higher-growth segments

JSE-listed pulp and paper manufacturer Sappi will acquire the speciality paper business of Swiss-based pulp and paper manufacturer Cham Paper Group (CPG) for a $149-million cash deal.

The transaction, which includes CPG’s Italy-based Carmignano and Condino mills, as well as its digital imaging business in Cham, Switzerland, will improve Sappi’s near-term profitability and serve as a platform for future acquisitions.

Speaking to Engineering News Online on Tuesday, Sappi CEO Steve Binnie said that the pulp and paper company has identified speciality paper as a key growth driver.

“We’re looking to transition Sappi away from traditional, high-end glossy magazine paper into higher growth segments, and this is another step in that direction,” he said on Tuesday.

He added that the acquisition, which is expected to be finalised by February next year, would further expand Sappi’s global presence in the speciality paper market. 

Binnie noted that Sappi’s targeted segments were predominantly in Europe and were growing between 1% and 5% a year.

“These growth markets typically generate margins in the mid-teens, which is extremely attractive for Sappi. We’ve also set ourselves a goal in our vision 2020 plan, which stipulates that 25% of our targets need to come from the speciality paper segment. This acquisition is helping us get very close to that goal,” he said.

Binnie added that the transaction would increase profitability and unlock the growth and innovation potential inherent within the speciality paper sector.

Not only will the acquisition add 160 000 t of speciality paper to Sappi’s capacity but it will also expose new customers and markets to the company’s existing products.

CPG’s speciality paper business will continue to operate separately and independently from Sappi until clearances from the authorities are obtained.