PaperlinX acquires Buhrmann paper arm

The paper merchanting arm of Dutch group Buhrmann NV has become the latest in a long list of acquisitions for PaperlinX, which will see the Australian company become the third largest paper merchant in the world.

The acquisition, worth US$1.3billion, had to be funded through debt and the issue of $350million in new shares. The deal should prove to be a boon for both PaperlinX and its shareholders, with group sales expected to double and substantially lift earnings per share (EPS).

According to PaperlinX managing director Ian Wightwick, sales are expected to reach $9billion annually, while EPS will grow by between five and ten per cent in the first full year after the acquisition is completed. By the end of the 2005/06 financial year, it is expected that EPS will have grown by around 40 per cent.

“The fact that we’re able to make a strategic move for PaperlinX, take advantage of the rationalisation that’s taking place internationally, and deliver an earnings per share increase for our shareholders provides us with a unique opportunity which otherwise we would not have had,” says Wightwick.

Wightwick also believes that the move will also improve PaperlinX’s position to benefit from an upswing in the market cycle, since the deal has been made during a market trough.

Wightwick is now expected postpone his retirement, initially slated for April 2003 when his three-year contract ended, until after the acquisition is completed and the companies have integrated.

The sale is still subject to approval from European competition regulators and Buhrmann shareholders, but is expected to be completed in August.

After the acquisition is completed, the company will employ 10,000 staff worldwide, operating in 26 countries, and sell four million tonnes of paper each year.

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