Acquisitions & Cartonboard

RDM Group acquires Paprinsa and strengthens its leadership on the Spanish market


RDM Group announces that its subsidiary RDM Barcelona Cartonboard of 100% of the share capital of four companies incorporated under the Spanish law. The deal covers the acquisition of one of the main European players of the coated chipboard industry, Papelera del Principado (“Paprinsa”), and three smaller companies operating in contiguous businesses based in the same site: Fergerdell, Cogeneraciò del Pla and Ondupacart.

The 15 sellers, owners of the holdings in the companies to be acquired, include both legal entities and individuals. According to Michele Bianchi, CEO of RDM Group, «the acquisition we are announcing today confirms that RDM Group continues to invest with the target of profitable growth, by selecting companies that adopt a consistent business approach. We keep strengthening our competitive positioning as the leading company in Southern Europe in the segment of recycled cartonboard, as part of a clear long-term strategy and leveraging on a solid financial position.  This allows us to be ready to grasp the utmost benefits from a demand that has proven to be solid even in the most critical times of the Covid-19 pandemic, due to the final uses of the material we produce.»

Founded in 1977, Paprinsa operates in the recycled White Lined Chipboard (WLC – White Lined Chipboard) business. The company has both its headquarters and mill in Mollerussa, just 130 km from Barcelona and less than one hour from the plant of RDM Barcelona Cartonboard. It manufactures 120,000 tons of recycled chipboard, with a potential capacity of 140,000 tons. Over the past six years, Paprinsa has made significant investments for more than 30 million EUR in its plant. Production includes a wide range of grades and grammages (from 180 to 550g). Today, Paprinsa is the no. 2 chipboard producer in Spain, and the eighth WLC producer in Europe. The paper mill has a trim width of 4.8 meters, which will make it the widest plant in RDM Group, as it is one of the largest paper mills of this sector in Europe. By further exploiting this size, RDM Group can count on a potential increase in the factory’s production capacity from the current 140,000 tons a year to over 200,000 tons a year, in line with the other top plants that are today part of the Group.

Ondupacart, instead, is a small corrugated board manufacturer. Fergerdell is the real estate company that owns the 30,000 sqm area on which the two manufacturing companies stand.

Cogeneraciò del Pla is the former cogeneration plant recently sold to Paprinsa. The company currently provides both plants with maintenance service.

The four companies have an overall workforce of 140 employees.

Over the past financial year, which ended on December 31, 2019, based on the Spanish GAAP, the four companies to be acquired reported revenues worth 65.9 million EUR, an EBITDA of 3.5 million EUR and a net loss of 456 thousand EUR.  As of December 31,2019, the net financial debt was 22.9 million EUR.

The provisional price for the acquisition of the four companies is based on a total Enterprise Value of 31.2 million EUR, calculated on a proforma EBITDA for 2020 of 5.2 million EUR, and on an estimated NFP of about 20.9 million EUR.

In detail, the preliminary contracts provide that the final price will be calculated by applying a multiple of six times the total 2020 EBITDA of the four companies, with an Enterprise Value of a minimum of 27 million EUR and a maximum of 33 million EUR.

At the closing of the deal, an initial amount of 5.9 million EUR will be paid, calculated on a minimum Enterprise Value of 27 million EUR and a NFP of 21.1 million EUR as at the end of August 2020.  The price will be subject to adjustments as provided in the agreements, based on the NFP, the working capital, and the overall EBITDA of the four target companies at the effective date of the transaction.

In this respect, it should be pointed out that RDM Group will fund the acquisition from its own cash resources.

Based on an estimated proforma EBITDA of 5.2 million EUR for 2020, the RDM Group expects to reach an EBITDA increase of between 3 and 5 million euro over the integration process of the coming three years.  Such benefits will be achieved mainly thanks to the full utilization of Paprinsa’s production capacity, the synergies with the Barcelona plant and the revision of certain procurement contracts.

Mr. Bianchi goes on commenting that «This is not only an attractive transaction in absolute terms. It is also an ideal acquisition to further strengthen our Group performance, when considering the value we can generate by including Paprinsa in the multi-mill approach of our asset portfolio, and the visible synergies that we can achieve by leveraging on the proximity with the Barcelona Cartonboard mill.»

The transaction closing is expected not later than March 31, 2021, subject to the fulfilment of some conditions precedent, including, besides obtaining some labour law and administrative authorizations, obtaining legal authorizations by the competent Antitrust authorities and the Integrated Environmental Authorization to increase the production capacity of the Paprinsa mill.

Under the agreements reached with the sellers, Reno De Medici spa has committed to be a guarantor of the subsidiary RDM Barcelona Cartonboard sau for all obligations arising from the acquisition contracts underwritten by the latter.