Ahlstrom-Munksjö signs a non-binding letter of intent to acquire Chinese decor paper producer Minglian
November 27, 2019
CHINA (News release) -- Ahlstrom-Munksjö has signed a non-binding letter of intent with the majority shareholders of Hebei Minglian New Materials Technology Co., Ltd. to acquire the company, comprising a state-of-the-art greenfield decor paper plant in the city of Xingtai, Hebei Province, China. The debt free purchase price is approximately EUR 60 million. The letter of intent contains customary exclusivity undertakings on the part of the sellers with respect to the considered transaction. The transaction is subject to further due diligence and final and binding transaction agreements, and it is expected to be completed during the first quarter of 2020.
By combining Minglian with its existing Decor business, Ahlstrom-Munksjö would have a strong presence in the world's two largest decor paper markets and improved cost competitiveness. The deal would allow Ahlstrom-Munksjö to leverage its leading brand and capabilities in the large and rapidly growing Chinese Decor paper market and strengthen Ahlstrom-Munksjö's ability to serve international customers both in the short- and long term. Ahlstrom-Munksjö would provide technical and operational expertise to Minglian and strengthen Minglian's commercial opportunities in the domestic high quality segment and adjacent export markets.
Minglian New Materials was established in 2016 by a group of experienced entrepreneurs with a background in the Chinese decor industry through a greenfield investment in new state-of the art paper machine technology and plant lay-out. The production started at the end of 2018 and the ramp-up has progressed well. The machine capacity is 50,000 tons per year.
"This planned deal is based on strong strategic and financial logic and is evidence of our ambition to create a stand-alone global leader in the decor paper industry. With Ahlstrom-Munksjö's best in class quality, technology and brand leadership we would have a lot to offer to potential partners, while leveraging Minglian's local state-of-the-art production facilities. Through the planned transaction we would gain several years of investment lead time," says President and CEO Hans Sohlström.
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