Kappa set for sell-off?

PPI, Nov 2004

THE NETHERLANDS

The Dutch corrugated giant, Kappa Packaging, has hired Goldman Sachs to broker a potential sale of the group. The move puts an end to months of speculation and denials that Kappa's owners, the private equity funds Cinven and CVC, were gearing up for a sell-off. The group aims to close a deal by mid-2005.

Kappa said it would consider an initial public offering, a sale to players in the forest products industry or in the financial sector, as well as a recapitalization under the protection of the existing owners. The group has not ruled out selling off individual businesses to separate buyers either. "We will have to see what Goldman Sachs advises," a spokeswoman said.

Kappa has tabled a provisional price tag of Euro 3.2 billion ($4 billion). Observers named International Paper, Stora Enso, SCA, Mondi, DS Smith and SAICA as potential buyers within the industry. But industry speculation currently favors a sale to Stora Enso or Mondi. Pundits also floated two investment firms, the UK's Candover and the Bahrain-based Investcorp, as possible bidders. Any potential buyer would need deep pockets: Kappa's net debt stood at Euro 1.8 billion at the end of June.