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Private equity backers to cash in from Smurfit Kappa float

Madison Dearborn, CVC and Cinven look to float packaging firm Smurfit Kappa in 2007.

The private equity owners of Smurfit Kappa may finally be able to realise at least part of their investment in 2007, after the Irish paper and packaging company confirmed that it is considering a €5 billion ($6.5 billion) flotation some time this year.

 

In response to “recent market speculation”, Smurfit Kappa said in a statement that it would ask its lenders to approve changes to its senior credit facility, in order to facilitate an initial public offering. The flotation, which is expected to take place in the first half of the year, could value the company at about €5 billion, according to analyst estimates.

 

Smurfit Kappa has three private equity backers, who co-own the company alongside management. CVC Capital Partners and Cinven backed a management buyout of Kappa Packaging when it spun out of Dutch conglomerate KNP BT in 1998, while Madison Dearborn acquired Irish-based Jefferson Smurfit for €3.7 billion in 2002. The two packaging firms completed a €6 billion merger in 2005 to create Smurfit Kappa.

 

The company, which reported turnover of €7.1 billion ($9.0 billion) in 2005, currently has debts of about €5 billion.