Mergers: Commission Approves Acquisition of Kappa Holding B.V. by Jefferson Smurfit, Subject

IP/05/1409

Brussels, 10th November 2005

Mergers: Commission approves acquisition of Kappa Holding B.V. by Jefferson Smurfit, subject to conditions

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Dutch companyKappa Holding B.V. (“Kappa”) by the Irish based international packaging group, Jefferson Smurfit (“JSG”), subject to conditions. The Commission found that the proposed transaction gave rise to competition concerns in various countries as regards corrugated boxes and solid board boxes, graphic board and solid board partitions, all products used in the packaging industry. However, the parties have offered remedies that remove the concerns identified by the Commission.

Competition Commissioner Kroes commented "The proposed remedies will remove the competition concerns and therefore maintain effective competition on all affected markets.”

JSG is an international packaging group with operations in Western Europe and Latin America, active in the manufacturing and sale of corrugated case materials, sheets, and boxes and the recovery of recycled wastepaper. JSG is jointly owned by Madison Dearborn Partners, a private equity business, and by its own management.

Kappa is active in the manufacturing and sale of corrugated case materials, corrugated and solid board sheets, corrugated and solid board, graphic and specialty board and the recovery of recycled wastepaper. Its operations are situated mainly in Western and Eastern Europe. It is jointly owned by CVC, Cinven and by its own management.

The operation as initially notified to the Commission raised serious competition concerns in the markets of corrugated boxes, solid board boxes, graphic board and solid board partitions.

The market investigation carried out by the Commission confirmed that the proposed transaction would:

-remove JSG as the closest competitor of Kappa in the market for corrugated boxes in Denmark

-reduce the number of players in the market for corrugated boxes in Sweden and significantly strengthen the parties’ position in this market

-significantly strengthen the parties’ position in the market for solid board boxes in some regions such as Sweden and France;

-remove JSG, the main competitor to Kappa in the EEA market for graphic board, and significantly strengthen the parties’ position in this market; and

-remove the main competitor for the market of solid board partitions in some areas like the UK and Ireland.

In order to remove these competition concerns, the parties offered the following commitments:

-as regards corrugated boxes in Denmark, to sell off JSG’s plants in Denmark i.e. the Neopac network comprising the Randers, Naestved and Horning plants

-as regards corrugated boxes in Sweden, to sell off JSG’s Swedish plants in Norrköping and Backefors (Dalwell) and Swedish corrugated headquarters in Jönköping

-as regards solid board boxes, to sell off the JSG’s Solidpack plant in the Netherlands

-as regards graphic board, to sell off Kappa’s graphic board plants in Hoogezand and Sappemeer in the Netherlands

-as regards solid board partitions: to sell off JSG’s Interlok solidboard partitions business in Port Glasgow in Scotland.

These commitments will considerably reduce the parties’ share and they will significantly reduce or completely remove the overlap in the markets and geographic areas concerned. The Commission considers that these commitments are appropriate to remedy the competition concerns.

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