Russian Paper Bags to Conquer World Markets
Sweden-based Investment AB Kinnevik said yesterday it is selling its subsidiary, Kornas Packaging, to Segezhsky Pulp and Paper Mill. The deal will make Segezhsky Mill the world’s largest paper bags producer and help it to enter world packaging markets.
Henrik Persson, the head of the investors relations department of Investment AB Kinnevik, reported that the agreement to sell Kornas Packaging had been reached a month before. “We decided to sell the business due to the current consolidation on the European packaging market,” the executive said pointing out to the attractive offer Segezhsky Mill made. Kornas Packaging was sold for ˆ73.5 million. The deal will be officially executed in the first half of 2006 when nine European plants producing paper bags will go to the Russian mill. The total capacity of the two companies is to exceed 1 billion paper bags and 300,000 metric tons of paper for bags annually.
Sgrezhsky Paper and Pulp Mill is the largest enterprise in Russia producing pulp, paper and paper bags. The company accounts for 60 percent of the Russian market and annually outputs over 330,000 metric tons of kraft paper and 582 million paper bags. Another company that works in this market segment is Kotlassky Paper and Pulp Mill, a subsidiary of Ilim Pulp Enterprise, though it does not produce paper bags. “The output of paper bags is not our profile business,” said Elena Konnova, the spokesman for Ilim Pulp Enterprise, explaining why their firm had not bought Kornas.
Segezhsky Mill has been related to Kornas before the purchase: the Russians have supplied plants of Kornas Packaging with kraft paper. Mills of Kornas Packaging are located in Spain, Germany, Czech Republic, Italy and Holland, Denmark, Romania, Serbia and Ukraine and their products are not exported to Russia. Yet, there is no need for it since the output of Segezhsky Mill exceeds the demand of the Russian market by 1 million items. Once the deal is terminated, Segezhsky Paper and Pulp Mill will be able to sell its paper bags on the European and Asian markets.
All the Article in Russian as of Dec. 16, 2005