The Jefferson Smurfit Group has acquired a 50 per cent stake in MacMillan Bathurst, the second largest Canadian producer of corrugated containers, for 185 million Canadian dollars (£83 million) in cash. It would be "modestly earnings positive" from 1999, Smurfit said. MacMillan Bathurst, based in Mississauga, Ontario, operates 12 corrugated container plants across Canada.
There are two in Quebec, five in Ontario, two in Alberta and one each in Manitoba, Saskatchewan and British Columbia. The plants produce some 450,000 tonnes of corrugated containers a year and employ 2,500 people.
The attributed profit before interest was some Can$15 million in 1997.
A spokesman for Smurfit said it was a very logical move for the group. Macmillan Bathurst was a profitable company and an opportunity arose which had to be taken, he added.
The opportunity arose because Stone Container Corporation, which is forming a joint company with JS Corp (Smurfit's US associate) exercised an option to buy the stake and this stake was then passed on to Jefferson Smurfit Group.
MacMillan Bathurst had been 50/50 owned by Stone Canada, a Stone subsidiary, and MacMillan Bloedel since 1989. MacMillan Bloedel offered to buy Stone's interest for Can$185 mil lion.
But under the partnership agreement, Stone had the right to accept that offer or require MacMillan Bloedel to sell its interest in MacMillan Bathurst for the same price. Stone exercised its right and bought the stake. It then offered the stake to Smurfit.
"This will enable Stone to retain its existing 50 per cent interest in MacMillan Bathurst and provides the Smurfit Group with the opportunity to enter a new market by taking an interest in the second largest Canadian producer of corrugated containers," the Smurfit Stone statement said.
Smurfit announced a 55 per cent increase in pre-tax profit to £94.7 million in the six months to end of June 1998, earlier this week. However, it warned that sustainable recovery in the paper and packaging industry had been deferred by the Asian crisis.
