Financial Mail and Business Day

Market welcomes R4.7bn Sappi exit

Michelle Gumede and Nico Gous

The shares of dissolving pulp-and-paper producer Sappi climbed to their highest level in four weeks on Thursday after it announced the sale of three of its mills in Europe as it looks to focus on the commercial print market on the continent. “These were the three weakest mills in our portfolio,” CEO Steve Binnie told Business Day. “We have been trying to reduce our exposure to the graphics market,” he said.

The shares of dissolving pulpand-paper producer Sappi climbed to their highest level in four weeks on Thursday after it announced the sale of three of its mills in Europe as it looks to focus on the commercial print market on the continent.

The share price climbed as much as 7.71% to R48.64, to reach levels last touched on August 29, before retracting to settle 6.07% higher at R47.90.

The R25.76bn company announced on Thursday that the three mills, which form part of the European Graphic Paper segment of the business, will be sold to pan-European multiasset manager group Aurelius Investment Lux One for €272m (R4.73bn).

“These were the three weakest mills in our portfolio,” CEO Steve Binnie told Business Day. “We have been trying to reduce our exposure to the graphics market and moving more towards the [dissolving pulp] and packaging markets,” he said, highlighting that Sappi is happy to have reached an agreement with Aurelius to take ownership of the three mills.

The priority is for Sappi to pay down debt with the proceeds, as the company looks to increase its presence in the packaging and speciality papers, pulp and biomaterials segments.

In Europe, Sappi will now focus on the more robust commercial print market and on the markets for flexible packaging, functional papers, self-adhesives and dye-sublimation.

The three mills sold to Aurelius are the Maastricht Mill in the Netherlands, the Stockstadt Mill in Germany and the Kirkniemi Mill in Finland. They form part of the company’s European business, which, according to it 2021 annual results, generated just under half of its total sales amounting to $2.64bn (R47.6bn).

Aurelius operates in Europe, North America and Asia and has interests in industrials, chemicals, IT and business services.

In terms of the sale agreement, which is structured as a share deal, Aurelius will acquire the specific legal entities that own and control the assets and liabilities of the different mills. The deal, which is subject to regulatory approval, is expected to be completed in the first quarter of 2023.

Sappi, which posted record profits in the third quarter of its 2022 financial year, is also aiming to boost its self-generating power capacity to supply electricity to the struggling national grid.

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2022-09-30T07:00:00.0000000Z

2022-09-30T07:00:00.0000000Z

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