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Announcement (February 16, 2009): Nippon Paper Group and its subsidiary Nippon Paper Industries, a Japan-based paper and pulp manufacturing company, have entered into an agreement with PaperlinX to acquire all the outstanding shares of Paper Australia. Nippon Paper Group is a Japanese holding company engaged in the paper manufacturing business. Paper Australia is a manufacturer and marketer of paper, pulp, and stationery, while PaperlinX is a manufacturer of communication and packaging paper. Nippon Paper has agreed to acquire the entire share capital of Paper Australia comprising 3,208.08 million shares. The consideration payable by Nippon Paper will consist of an upfront payment of AUD600 million ($394.5 million) and subsequent payments linked to Paper Australia's performance in each of the fiscal year ending June 2010 to 2012. The maximum consideration for the three years will be AUD100 million ($65.71 million). The transaction does not include the two Tasmania-based manufacturing plants owned by Paper Australia. Also, the PaperlinX group units that handle the sales and administration of Paper Australia's products will be transferred to Paper Australia before completion of the transaction. The transaction is expected to close by June 2009. Blake Dawson is acting as legal advisor and Macquarie Capital Advisers Limited is acting as financial advisor to Paperlinx. Deal Value (US$ Million) 459.98 Deal Type Acquisition Sub-Category 100% Acquisition Deal Status Completed: 2009-06-01 Deal Participants Target (Company) Australian Paper Pty Limited Acquirer 1 (Company) Nippon Paper Group, Inc. Acquirer 2 (Company) Nippon Paper Industries Co., Ltd. (formerly known as Jujo Paper Co., Ltd.) Vendor (Company) PaperlinX Limited Deal Rationale The acquisition of Paper Australia is part of Nippon Paper's strategy to become one of the top five players in the global pulp and paper industry by accelerating its overseas business development to achieve growth. According to Nippon Paper, Australia has a commercial publishing market with sustainable growth and has a low domestic production ratio. The acquisition is expected to provide Nippon Paper an opportunity to expand its business into Australia, especially when the Japanese domestic market is near saturation. It would also enable Paper Australia to improve its production efficiency and establish the corporate structure suitable to compete with imported paper. The sale of Paper Australia is part of PaperlinX's strategy to concentrate its management resources on paper trading business. Through the transaction, Nippon Paper would deepen its relationship with PaperlinX, which would contribute to its overseas expansion in the future. For full details for PPXLF click here.
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