The transaction means the combined group will become the worlds fourth largest European corrugated producer behind Smurfit, Kappa and SCA. Anglo American will own all of the enlarged Mondi Packaging firm.

Mondi Group chairman and chief executive David Hathorn said discussions had started just over a year ago.

This will broaden our European coverage and gives us a quality operation aimed at the higher end of the market, he said.

Although he said there was little overlap between the two businesses, there could be some job cuts.

Net debt in German-headquartered Bauernfeind stands at around 175m, giving a total combined value for the deal of 241m.

Bauernfeind comprises corrugated and converting operations in Germany, Belgium, Austria, Poland, Italy, Switzerland and China.

It has five mills, producing around 580,000 tonnes per year of corrugated case materials, as well as 10 corrugated plants, employing a 2,200 staff. It has annual sales in the region of 351m.

Mondi Packaging produces corrugated paper, board and boxes, with a production capacity of 735,000 tonnes per annum of corrugated paper, and has operations in France, Poland and Ireland, with three plants in the UK in Lancashire and Cheshire.
The deal is subject to regulatory approval.

Story by Andy Scott