US private equity house Madison Dearborn Partners has reached initial agreement to buy Irish-founded packaging company Powerflute less than a year after failing at the first attempt.
Finland-based Powerflute — founded and chaired by Dermot Smurfit Sr — yesterday announced that an agreement has been reached that is set to see Madison Dearborn, via affiliate firm Nordic Packaging and Container (Finland), acquire the business for around £268m (€315m).
The cash offer has been recommended to shareholders.
Madison Dearborn failed in an initial bid for Powerflute last December, when it tabled an offer of around £261m for the firm.
However, talks between the two parties, reportedly, resumed in April of this year.
Mr Smurfit and his brother Michael own close to 28% and are being offered 80p per share for their holdings.
The remaining (non-Smurfit family) shareholders are being offered 90p per share. The Smurfit brothers stand to receive a combined €77m, or so, for their holdings.
Powerflute — formed in 2005 after a takeover of troubled Finnish paper mill Savon Sellu — said on the back of a flat set of first half figures in August that it remained open to making further acquisitions despite challenging market conditions weighing on its performance this year.
Madison Dearborn acquired the original Jefferson Smurfit business in 2002 before merging with Dutch group Kappa Packaging and floating as Smurfit Kappa in 2007.
At the time of its interim results, Powerflute management said it was “still evaluating value-accretive acquisition opportunities”, having seen its 2014 takeover of international cardboard manufacturer Corenso boost group earnings.
Madison Dearborn has secured the support of 51% of Powerflute shares for its bid, it was reported yesterday.
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