OCCG has operations in northern Mexico and the southern United States. OCCG employs 2,800 people (2,000 of whom are employed in Mexico), and is expected to generate $53m of earnings before interest, taxes, depreciation, and amortization [EBITDA] for the full year 2012.
In a statement, Smurfit Kappa said that OCCG's strong strategic fit with the corrugated firm's existing businesses is expected to deliver at least $14 million of synergies by the end of year two.
The $340 million cash consideration will be funded from the Group's existing cash resources.
It is anticipated that the transaction will complete before the end of 2012 subject to customary completion conditions and regulatory approval.
Mexican market
Smurfit Kappa Group chief executive Gary McGann said: "We are pleased to announce our agreement to acquire Orange County Container Group. We look forward to welcoming the excellent team from OCCG into the Smurfit Kappa Group and we are confident that their skills and expertise will complement those of our colleagues in the relevant markets.
"The acquisition delivers immediate earnings growth for SKG and significantly strengthens our existing position in the Mexican market.
"The continued strength of our operating performance and consequent net debt reduction has increased the range of strategic and financial options for the Group. The acquisition of OCCG provides a complementary portfolio of well-invested assets and quality people.
"This transaction further increases the contribution of our existing successful Latin American business; providing us with a very significant position within the key Maquiladora trading region and substantially strengthening our position in the higher growth Mexican market.
"SKG has a proven track record of identifying, acquiring and integrating businesses. This transaction creates synergies for the Group delivering value and earnings growth for our shareholders."
Facts about Orange County Container Group
8 main packaging facilities in Mexico comprising 2 box plants, 3 sheet plants and 3 fulfilment centres 7 distribution centres in Mexico 2,800 employees (2,000 in Mexico; 800 in the United States) 2 packaging facilities in the southern part of the United States comprising 1 box and 1 sheet plant A 290,000 tonne recycled containerboard mill in the southern part of the United States A substantial US based recovered paper collection system.
