Packaging major Huhtamaki, Finland has entered into an agreement for the acquisition of Positive Packaging, which supplies packaging materials for brands like Bingo and Surf Excel, in a $336 million (Rs 2,000 crore) transaction.
Headquartered in Espoo, the deal would provide the company a major toehold with India's rising middle class and disposable incomes driving demand for packaging products. Positive Packaging has 9 manufacturing facilities in India and is promoted by Enpee group.
Huhtamaki, known for making paper cups for McDonald's, said that the buy will increase its access to Indian and Middle Eastern markets.
Positive Packaging had sales of 220 million euros ($300 million) last year employing about 2,500 staff in India and the United Arab Emirates, Huhtamaki said.
"The deal is poised to increase our market share and supply capacity in India while our footprint in Africa and the Middle East will be enhanced significantly," a Huhtamaki spokeswoman said.
The total turnover of packaging industry is valued at $550 billion with India's share at $24.6 billion per annum.
Huhtamaki with Positive Packaging moves ahead as a leading flexible packaging provider in the fast-growing emerging markets.
Approval from Competition Commission of India and RBI clearance are still needed to complete the transaction and is expected to close by Q4 of 2014.
The acquisition is said to be funded through internal accruals and issue of 10 million equity shares of Rs 2 to the Huhtamaki group on preferential basis at Rs 134.08 totalling to approximately Rs 134 crore and issue of Non-Convertible Debentures upto Rs 820 crore on private placement basis.
With the news of aqcuisition, shares of Huhtamaki PPL fell 2.78% to Rs 143.40 at 10:35 IST on BSE. The stock was declining on profit booking after gaining 11.23% in prior three trading sessions.