Essel Packaging in merger deal with Propack

MUMBAI, NOV. 15. Essel Packaging has announced a merger with Swiss company Propack through a stock-cash deal involving a payment of $11 million and offer of 22 per cent equity to the Swiss company towards its valuation.

Announcing the merger here today, the EPL Chairman, Mr. Subhash Chandra, said the EPL board had approved the merger in principle this morning and it would be kept for technical approval before the shareholders at the extra-ordinary general meeting (EGM) scheduled to be held in the third week of December.

Initially Essel will hold 34 per cent equity and Propack 22 per cent while remaining equities are with financial institutions and others. According to Mr. Chandra, Propack, largest laminated tube producer, has been valued at $350 million by leading financial consultants.

The merged company is proposed to be called `Essel Propack Ltd.' Mr. Chandra declared. The merger of these two packaging leaders have paved the way to acquire entire global market and with their efforts the new entity would acquire 80 per cent of the market share in leading markets such as India and China, Mr. Cyrus Bagwadia, Managing Director, EPL said during his presentation.

Mr. Bernhard Schwyn, Propack chairman who had signed the deal this morning with EPL, termed the merger of unique strengths in global management, innovations and technology. "We aim to be the most admired partner supplier. In that respect, Propack could not have found more ideal partner than Essel Packaging," he said.

Mr. Schwyn and his family holds 22 per cent of equity in Propack would be accommodated in the board of Essel Propack while restructuring the board, Mr Chandra announced.

Describing about the deal further, Mr. Chandra said that EPL will issue 6.88 million shares (22 per cent of post bonus, post merger equity) to Propack shareholders cash payment of $ 11 million.

"By merging resources and innovations, the new company will aim at significantly enhancing the services and benefits for our valued customers and with our global presence in the four continents in this world combined with managerial expertise in dealing with such markets in India and China will help us to captain the future of our company worldwide," Mr. Chandra said.

According to him, issued shares will have a lock-in-period.

EPL began its operations in 1984 with a humble beginning of 50 million tubes per annum. Over 15 years it has grown 30 times and has operations now in China, Germany, Egypt, Nepal besides five plants in India. Propack, the fourth largest laminated tube producer with operations in China, the Philippines, Indonesia, Venezuela and Columbia.