Specialty papers maker
) has cut a definitive deal to buy German specialty non-wovens
maker Dresden Papier GmbH from Fortress Paper Ltd. for €160
million (around $209 million).
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Dresden is a leading manufacturer of nonwoven wallpaper base
materials. Nonwoven wallpapers are increasingly being adopted by
wallpaper installers and design professionals in Europe given its
superior performance and attributes such as dry strip-ability,
higher tear resistance and no material shrinkage/expansion when
wet. There is a compelling growth opportunity for these products
The acquisition, which is subject to customary closing
conditions, including German and Ukrainian regulatory clearances,
is expected to consummate during second-quarter 2013. Following
the buyout, Dresden will become part of Glatfelter's Composite
Fibers unit, which makes fiber-based products for growing global
Glatfelter plans to fund the takeover with available cash and
debt. It had cash of $98 million and $345 million available under
its revolving credit facility at the end of 2012. Glatfelter sees
the acquisition to be immediately accretive to its earnings per
share by around 25 cents a share on an annualized basis.
The Dresden buyout will add an industry-leading nonwovens product
line to Glatfelter's Composite Fibers segment and will offer it
operational leverage and growth opportunities globally.
Revenues from the Composite Fibers business slipped roughly 12%
to $105.3 million in fourth-quarter 2012 as soft demand and
difficult economic conditions in Europe led to a decline in
shipping volumes. Notwithstanding the ongoing European economic
challenges, Glatfelter envisions the global nonwoven wallpaper
business to continue to grow at a compound annual growth rate of
at least 10%.
Glatfelter, which competes with
) among others, makes specialty papers and fiber-based engineered
materials. Its offerings include security papers, book publishing
papers, envelopes, converting papers, shopping bags, food and
beverage paper, metallized products, composite laminates papers
and feminine hygiene products.
Glatfelter is expects to benefit from its ongoing growth
initiatives. The company anticipates shipping volume for its
Specialty Papers unit in first-quarter 2013 to be in line with
the fourth quarter level. For both Composite Fibers and Advanced
Airlaid Materials businesses, Glatfelter expects shipping volumes
to be 5% higher sequentially in the first quarter.
Glatfelter currently retains a short-term Zacks Rank #3 (Hold).
Other paper and paper products companies with favorable Zacks
Resolute Forest Products Inc.
Clearwater Paper Corporation
). While Resolute Forest retains a Zacks Rank #1 (Strong Buy),
Clearwater hold a Zacks Rank #2 (Buy).