Stora Enso to set up paperboard joint venture in Pakistan

Finnish company sees rapid growth in the sector.

Forest Group Stora Enso – a Finnish company providing global solutions based on renewable materials – is to set up a paperboard joint venture in Pakistan with Packages called Bulleh Shah Packaging as it shifts focus from its ailing papermaking business to healthier areas such as the packaging business.

Stora Enso, which holds a 6.4% share in Packages, said that it predicts fibre-based consumer board consumption in Pakistan growing 9% annually. The company said that the joint venture’s sales were forecasted to be $130 million this year and the joint venture will employ about 950 people.

The Finnish company said that both partners will invest $135 million into the joint venture during 2013 and 2014. The agreed value of the company was about $108 million on a cash and debt free basis. Stora Enso’s initial shareholding will be 35% with a commitment to increase the shareholding at the agreed value to a conditional 50% at a later stage. The joint venture will include the operations of the Kasur mill and Karachi plant currently owned by Packages. The total consideration can go up to $125 million based on the financial results of the second half of 2012 and the first half of 2013. The deal, subject to regulatory approval, is seen being completed in the first quarter of next year.

Stora Enso, saying every third beverage carton in the world is made from its materials, earlier this year announced a plan to invest 1.6 million euros to build a consumer board and eucalyptus pulp mill in China.

Published in The Express Tribune, September 19^th, 2012.