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Mercer International Inc. (NASDAQ: MERC) has agreed to acquire all of the outstanding shares of the parent company of Holzindustrie Torgau (HIT) for consideration of €270 million ($275.4 million), inclusive of forecasted net working capital of ~€43 million.
HIT is a producer of EPAL wood pallets used for shipping. HIT owns, among other things, 100% of a timber processing and value-add pallet production facility in Torgau, Germany, and a wood processing facility in Dahlen, Germany, that produces garden products.
For FY21, HIT had net revenues of €227 million, net income of €31 million, and Adjusted EBITDA of €68 million.
For 1Q22, HIT had revenues of €72 million, net income of €12 million, and Adjusted EBITDA of €22 million.
Mercer expects HIT integration to generate operating synergies of ~$16 million per year and the deal to be immediately accretive.
The transaction is expected to close in the third or early fourth quarter of 2022.
Mercer intends to pay the purchase price using its existing cash on hand and/or revolving credit facilities. The forest products company held cash and equivalents of ~$410.7 million as of March-end.
Price Action: MERC shares are trading lower by 2.40% at $15.07 on the last check Friday.
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