The European paper based tube/core and coreboard operations of Sonoco and Ahlstrom are to be merged. Sonoco will manage the joint venture, which will operate under the name Sonoco-Alcore with James A Harrell, division vp, Sonoco Industrial Products/Paper-Europe, in charge.
Sonoco will contribute 25 tube and core plants – one each in Belgium, The Netherlands, Norway, Greece, Poland, Switzerland and Turkey, two in Spain, three each in Germany and Italy, and five in both France and the UK. It will also contribute six paper mills, two in France, and one each in Germany, Greece, Italy and the UK.
Ahlstrom’s contribution is 15 tube and core plants – one each in France, Estonia, Norway, Poland and Russia, two in both Germany and The Netherlands, and three each in Sweden and Finland. It will also contribute its Karhula paper mill and Anjalankoski recutting centre, in Finland.
The total sales for all of these operations in 2003 were approximately $337M.
Following an initial two and-a-half year standstill period and “subject to certain conditions”, Ahlstrom will have the right over the next three and-a-half years to “put” its shares in the joint venture to Sonoco for purchase based on a multiple of earnings. During the seventh year, Sonoco will have the right to “call” Ahlstrom’s shares in the joint venture for purchase based on the same earnings formula.
Sonoco has also signed an agreement to purchase 100 per cent of Ahlstrom’s Chinese paper tube/core operation in Shouguang for an undisclosed price.
This operation will not be part of the joint venture. Sonoco currently has a paper mill and tube and core operations in Shanghai, a tube and core converting facility in Kaiping, and is building a tube and core converting facility in Wujiang, which is expected to open in the third quarter of 2004.
The European joint venture and purchase of the operation in China are subject to regulatory approvals.
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