Europe’s largest office-paper maker Mondi is in talks to buy Smurfit Kappa Group’s (SKG) European sack-converting operations in return for Mondi’s corrugated board operations in the UK.

The transaction is subject to “normal procedures and conditions” attached to “these transactions,” the Johannesburg-based Mondi said in a statement to the city’s stock exchange today. There is no certainty a transaction would be concluded, the company said.

European and North American paper companies have been forced to shutter operations as demand for paper and pulp products fell in response to recessions in the world’s largest economies. Before the global financial crisis struck, paper makers were battling excess capacity and low pricing power.

The corrugated board operations are the three remaining converting sites that Mondi owns in the UK, Mondi spokeswoman Kerry Crandon said. No capacity details have been released, she said.

Mondi did not disclose the value of the potential transaction. “We are not making any comment beyond what is in the statement,” said Brian Bell, a spokesman for SKG.

- Nicky Smith

© Bloomberg

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