Germany’s Pfleiderer to Acquire Wood Producer Kunz
Neumarkt, July 18--Pfleiderer AG is acquiring the engineered wood activities of the Kunz Group, Unterensingen. Both sides signed an agreement to this effect last Friday evening. Alongside other conditions, the transaction requires approval by the antitrust authorities for the markets concerned.
In a share deal Pfleiderer AG is to acquire the engineered wood operations of the Kunz Group in Germany, Canada and the USA, which during financial year 2004 achieved global sales of 556 million euros with EBITDA of just under 85 million euros, and currently employ 1,800 people.
In North America, the Kunz Group is represented through its 100-percent affiliate Uniboard Canada Inc., with registered offices in Laval in the Province of Quebec. This company contributes around two-thirds of Group sales. Uniboard operates at nine sites (8 in Canada and 1 in the USA) where it produces raw particleboard, MDF, laminated flooring and other surface-finished products. As one of the few integrated manufacturers of laminated flooring, Uniboard Canada Inc. is a market leader in North America in this high-growth segment.
In connection with this transaction, Pfleiderer AG will also gain the minority share in the MDF plant in Baruth previously held by the Classen Group. The deal excludes the Kunz Group's foil and decor activities in Germany (W.K.P. Württembergische Kunststoffplattenwerke GmbH & Co. KG) and Canada (CDM Decor Papers, Inc.).
The purchase of all the acquired shares, backdated for commercial purposes to January 1, 2005 equates to a price of around 212 million euros. In addition, Pfleiderer AG is also to take over financial net debts of approximately 267 million euros.
Currently, the Kunz Group is operating in Germany at sites in Ebersdorf and Gschwend, where it produces around 750,000 cubic meters of raw particleboard, and in Baruth in Brandenburg, where it produces around 450,000 cubic meters of MDF/HDF.
With five sites in Germany and two sites in Poland, Pfleiderer Engineered Wood achieved sales of just under 760 million euros during financial year 2004. Currently a new engineered wood plant is being established in Novgorod, Russia which will commence production at the end of 2005.
After combining the engineered wood activities of both companies under Pfleiderer Engineered Wood, the Board of Management of Pfleiderer AG is aiming for sales in this Business Segment to reach around 1.4 billion euros in 2006, with EBITDA at over 200 million euros.
As a result of the acquisition, Pfleiderer AG will become even more a global player as a system supplier of engineered wood for the furniture industry and interior design worldwide. Through the products and sales activities of the Kunz Group, Pfleiderer gains access to the laminated flooring segment in particular, and is taking over a company in North America that has enjoyed a leading market position for over 20 years.
For Hans H. Overdiek, CEO of Pfleiderer AG, the acquisition of the Kunz Group represents an important step on the path to fresh growth and to further improved earnings power for the Pfleiderer Group. Shareholders will participate through a steady rise in the value of the company: "Following the takeover of the Kunz Group and the successful startup of our new plant in Russia, we want to achieve around 30 percent of sales in North America and just as high a percentage in Eastern Europe. We not only expect dynamic market growth in these regions, but also considerably higher margins compared to Germany. But in Germany, too, we expect to strengthen our market position and to gain noticeable synergic effects resulting in higher productivity and improved cost structures."
For Dr Wilhelm Dengler, spokesman for the management of Kunz Holding GmbH & Co. KG, the potential for growth in North America based on solid earnings power is of particular strategic worth.
