The Swedish company says it is partnering with local player Packages Ltd, with the venture to be known locally as Bulleh Shah Packaging, concentrated on serving the fast growing market for packaged consumer goods in the country, as well as international markets.
Stora Enso says that its initial shareholding will be 35 per cent with a commitment to increase the shareholding at the agreed value to 50 per cent at a later stage, which will subject to specific market conditions being met.
Investment package will total up to €260m
The company confirmed that it has paid €83m for its share in the business, which could be raised to as much as €125m if initial performance targets relating to results for the second half of the 2012 and the first of the 2013 financial year are achieved.
Likewise, a further €135m investment in the business from both Stora Enso and Packages Ltd during 2013 and 2014 to expand the business is also dependent on these targets, raising the total possible investment to €160m.
The companies have also confimed that the joint venture will include the operations of the Kasur mill and Karachi plant currently owned by Packages Ltd.
Targeting annual sales of €100m
The joint venture will employ around 950 staff at its operations in the country and is targeting approximately €100m in sales during its first financial year in business.
“This is an example of Stora Enso’s investments in value-creating growth markets,” said Mats Nordlander, executive vice president, Renewable Packaging Business Area.
“The Pakistani market, with growing demand for packaging products and paperboard, offers an attractive growth opportunity for us and the joint venture will enable us to increase our capability to serve our key customers.”
The transaction is subject to Pakistan merger and acquisition regulations and other customary conditions, but is expected to be completed during the first half of 2013.