Swedish paper and packaging company Svenska Cellulose Aktiebolaget wished to dispose of Reedpack Plastics Group, a business they had acquired as part of a larger previous acquisition. Cinven’s investors had been involved in the previous transaction and were therefore well placed to assist with the sale of the Plastics Group to its management.
The business was a major UK producer of rigid plastic packaging and was market leader in several of its product areas. It had five production operations and a stable customer base including a number of substantial UK firms.
Under its experienced management team the organisation and leadership of its production plants were to be improved to increase return on investment. As a result of recent substantial capital expenditure the business had state of the art production facilities at many of its sites. Management planned to focus the additional capacity in penetrating high growth markets within the plastic packaging sector.
Following the buyout, the renamed business showed a dramatic improvement in performance. It was able to repay its debt and consider making acquisitions. In May 1993 it was successfully floated on the London Stock Exchange enabling it to access additional funding to finance its plans, while Cinven’s investors were able to achieve a significant capital gain on their original investment.
Multiple returned on investment: 5.4x