Stora Enso expands renewable packaging business to Pakistan - Papermart

Stora Enso expands renewable packaging business to Pakistan

September 18, 2012


Stora Enso has signed an agreement to establish a joint venture called Bulleh Shah Packaging Private Limited with Packages Ltd. of Pakistan. Stora Enso’s initial shareholding will be 35% with a commitment to increase the shareholding at the agreed value to 50% at a later stage subject to certain conditions being met. The joint venture will include the operations of the Kasur mill and Karachi plant currently owned by Packages Ltd.

The joint venture will to a large extent provide packaging products to key local and international customers in the fast-growing Pakistani market. The joint venture will employ about 950 people and its sales are forecasted to be USD 130 million (EUR 99 million) in 2012.

The agreed value for 100% of the joint-venture company is approximately USD 108 million (EUR 83 million) on a cash and debt free basis. The total consideration can be up to USD 125 million (EUR 96 million), including an additional maximum performance compensation based on the financial results of the second half of 2012 and the first half of 2013. As part of the agreement, both parties are committed to a substantial USD 135 million (EUR 103 million) investment programme during 2013 and 2014 to develop the business further. The joint venture is EPS accretive and will over time after the new investments exceed Stora Enso’s ROCE target of 13%.


“This is an example of Stora Enso’s investments in value-creating growth markets. 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,” says Mats Nordlander, Executive Vice President, Renewable Packaging Business Area.

The joint-venture transaction is expected to be completed during the first quarter of 2013, subject to competition and regulatory approval and other customary transaction conditions.

Packages Ltd. is the largest packaging and board producer and converter in Pakistan. It has 3000 employees. The main assets are located in Lahore and Kasur in the province of Punjab. The market capitalisation of Packages Ltd. is USD 86 million and the shares are listed on the Karachi, Islamabad and Lahore stock exchanges. Packages Ltd. has a long tradition of working with key local and international companies. Stora Enso already has a 6.4% shareholding in Packages Ltd.