The making of a winning combination
The Smurfit Kappa Group was formed at the end of 2005, becoming one of the strongest packaging businesses in Europe and Latin America. The Group’s history covers more than seventy years.
1934 Jefferson Smurfit began as a small Irish boxmaker.
1964 The company went public and started to expand in Ireland.
1970’s Jefferson Smurfit Group (JSG) expanded and diversified in the UK, USA, Europe and Latin America
Meanwhile, two separate Dutch companies, Bührmann-Tetterode (BT) and KNP (Koninklijke Nederlandse Papierfabrieken) started the build-up of packaging interests in addition to their other operations.
1986 In a joint venture with Morgan Stanley leveraged Equity fund, JSG acquired 50% of Container
Corporation of America (CCA). The following year JSG also acquired CCA’s European
interests.
1989 JSG consolidated all of its US businesses into one company which was jointly owned by JSG and Morgan Stanley and, in the process released cash back into JSG for expansion into Europe. CCA’s Venezuelan and Puerto Rican operations were purchased thus increasing the Group stake to 78%.
The Group exercised its option over Colombia and Mexico and increased both its Colombian and Mexican stakes, to 64% and 100% respectively.
Meanwhile, the two Dutch groups BT and KNP continued to develop in Europe and a third group, the Swedish Assi business all continued to develop and expand by acquisitions in Europe.
1990’s Expansion in the European arena
In the early 1990’s, JSG continued its expansion into Europe through the purchase of paper assets in Germany, the UK, France and Holland, as well as corrugated assets in France. It also increased its presence in Mexico.
In 1993, the US Company, Jefferson Smurfit Corporation was floated on NASDAQ.
Meanwhile, the two Dutch groups merged to become KNP BT, with significant market shares in the UK, Benelux, France, Germany, Poland and the Czech Republic.
1994 The paper and paper packaging operations of Compagnie de Saint-Gobain were acquired by JSG. This transaction made Jefferson Smurfit Europe's largest paper-based packaging group.
1995 JSG purchased the Limousin paper Company in France, a share of the Nettingsdorfer paper Company in Austria and a 33% stake in Munksjö Sweden.
Meanwhile, in 1998, Kappa Packaging was formed by the detachment of the paper & packaging interests of KNP BT. In the Dutch language the name Kappa, which was already in use, represents KArton Produktie & Papier. A management buy-out was arranged with the two institutional investors CVC and Cinven.
1998 Jefferson Smurfit Corporation ("JSC") and Stone Container Corporation merged to form the world's largest producer of containerboard and corrugated containers. JSG owned 33% of the combined operation. That same year JSG acquired 50% holding in Smurfit MBI with the other remaining 50% being owned by SSCC. Smurfit MBI is now the second largest Canadian producer of corrugated containers.
During the 1990's JSG also purchased operations in Argentina, Portugal and Germany.
2000’s Acquisitions in Austrian and Chinese companies
In December 2000, the JSG increased its holding from 75% to 100% in the Austrian company, Nettingsdorfer Papierfabrik AG & Co. KG. At the same time, JSG acquired a 25% holding in the Hong Kong based Leefung Asco Printers Ltd., with an option to increase the holding to 51% at a later date.
In the early 2000s, JSG also purchased operations in Denmark and the UK, as well as increasing its reach in Argentina through the purchase of two more corrugated operations.
Meanwhile, in 2001 Kappa Packaging almost doubled its size by the acquisition of the packaging interests of the Swedish AssiDomän Group. With strong operations right across Europe, including well established businesses in Central and Eastern Europe, the size of the Kappa Packaging business in Europe rivalled that of JSG.
2002 Madison Dearborn Partners acquires JSG
In September 2002, JSG was acquired by Madison Dearborn Partners while its shared owned associate, SSCC, was spun off to JSG shareholders. As one of the largest and most experienced private equity firms in the USA, MDP has significant expertise in the paper packaging business. The JSG investment was the 5th for them in the packaging industry and the most significant to date in any sector.
2003 The complete acquisition of SSCC’s European assets
In March 2003, JSG completed the acquisition of Smurfit-Stone Container Corporation's (SSCC's) European packaging operations, located in Germany, Belgium and Spain. In order to secure the acquisition, JSG agreed to exchange of its 50% ownership in Smurfit MBI and consideration of approximately €185 million for SSCC's assets.
2005 JSG and Kappa Packaging merged to become the Smurfit Kappa Group. This merger was finalized by the end of 2005. The group is owned by Madison Dearborn Partners, by Cinven Limited and CVC Capital Partners and by management.
2006 Following the merger, SKG undertook a major rationalisation programme to improve the asset base of the group and to realise the synergistic benefits of combining the complementary operations.
2007 In March 2007, SKG returned to the public equity markets through the successful completion of an all primary IPO. Gross proceeds of €1.5 billion were applied to reduce debt and optimise SKG’s capital structure. Madison Dearborn Partners, Cinven Limited and CVC Capital Partners remained as major shareholders in the group, holding together approximately 45% of the issued shares after the IPO.
2008 The near to medium term focus is on cash generation and debt paydown, thereby and giving the group increased financial flexibility to grow its exposure to higher growth markets (such as Eastern Europe & Latin America), and to participate in industry consolidation opportunities.
The Smurfit Kappa Group Today
SKG is a world leader in paper-based packaging. The group operates in 22 countries in Europe and is the European leader in containerboard, solidboard, corrugated and solidboard packaging. In addition, the group has a key position in several other paper and packaging market segments including graphic board, sack paper, paper sacks and bag-in-box. SKG also operates in 9 countries in Latin America where it is the only pan-regional operator.
SKG’s operations are divided into packaging and specialties. The packaging segment is highly integrated and includes a system of paper mills that produce a full line of containerboard that is converted into corrugated boxes by the group’s converting operations. The specialties segment primarily consists of the graphicboard and solidboard businesses and the sack paper and bag-in-box operations. SKG is also the industry leader in recycling in Europe, sourcing approximately 5 million tonnes of recovered paper as raw material for the group’s mills.