Scientex to capture consumer packaging with latest acquisition of Mondi; ups capacity by 30%

Malaysian packaging giant Scientex Bhd is acquiring smaller rival Mondi Ipoh Sdn Bhd (MISB) for RM58 million cash to expand its consumer packaging division. The public-listed Scientex, in a filing with the Malaysian stock exchange, says its wholly-owned unit Scientex Packaging Film has signed a share purchase agreement with MISB’s parent company Germany-based Mondi Consumer Packaging International GmbH to acquire 21.05 million shares or a 100% stake in MISB. The buy will boost Scientex’s consumer packaging production capacity by 30% from 60,000 tonnes 76,800 tonnes/year.

Scientex said the proposed buy will be funded via internal funds and to be completed by 11 August. Mondi Consumers Packaging is a wholly-owned subsidiary of international packaging and paper group Mondi, which employs around 25,000 people across more than 30 countries, with key operations are located in central Europe, Russia, North America and South Africa.

Scientex Managing Director Lim Peng Jin said, “The acquisition of MISB will allow the enlarged Scientex group to expand our clientele to include leading international brands in the food and beverage and fast-moving consumer goods sectors.” Lim also said that with 70% of MISB’s revenue comprising exports to Asia Pacific, it will give Scientex a larger market share in the regional packaging industry.

Scientex also stands to benefit from the increased production capacity of its downstream consumer packaging products, especially functional films.

The move to acquire Mondi should expand Scientex’s market share in the consumer packaging sector, which sees better growth potential compared to its core market for industrial packaging, where it operates a capacity of 147,600 tonnes/year currently.

Scientex consolidated all its consumer packaging businesses under one entity, Scientex Great Wall Sdn Bhd (SGW) last year following, the acquisition of other Malaysian rivals Great Wall Plastic Industries (GWPI)’s PE film business and Seacera Polyfilms’s BOPP film business in FY2013 and FY2014 respectively. SGW is wholly-owned by Scientex Packaging Film.

It also entered into an alliance with Japan’s largest biaxially oriented polypropylene (BOPP) film manufacturer, Futamura Chemical Co (FCC), to build a BOPP film manufacturing plant in Malaysia. The expansion of its CPP and BOPP films capacities are on track for completion by mid-2016.

To date, Scientex has manufacturing facilities in Malaysia and Vietnam; as well as sales and marketing arms in Japan and Indonesia. Approximately 80% of its manufacturing products are exported to over 60 countries worldwide.

Mondi divesting consumer packaging
MISB’s principal activity is the production of speciality consumer packaging films and film-based components like form-fill-seal bags. It has two manufacturing plants in Sungai Siput and Chemor in Perak with a total production capacity of 16,800 tonnes/year. It has net assets worth RM37.24mil as at Dec 31, 2014. It made a lower net profit of RM144,148 last year compared to RM2.88mil the previous year due to a one-off gratuity payment of RM2.7mil.

Also last month, Mondi signed an agreement with Germany’s Polifilm Extrusion GmbH, to sell Mondi’s film manufacturing site in Osterburken, Germany; subject to competition clearance. The sale will enable Mondi to refine its product portfolio and move away from supplying films to competitors of its consumer packaging business. Polifilm offers a complementary product portfolio to Mondi Osterburken, which mainly produces PE laminating films and household cling films.