27th Nov 2019 10:49
(Alliance News) - Plastic and fibre product supplier Essentra PLC said Wednesday it has established a new joint venture, China Tobacco Essentra (Xiamen) Filters Co Ltd.
The agreement for the partnership in China, Essentra said, is a "game changer" for its Filters unit. The business recently signed its first "significant" outsourcing deal, worth GBP8 million in annual revenue.
"This alliance will open up Essentra's access so that it can further tap into the market in China," the company said.
Essentra will hold a 49% stake in the partnership, with China Tobacco Fujian Industrial Co owning 21%. Shanghai Haiyan Investment Management Co, China Tobacco Hunan Investment Management Co and China Tobacco Guangxi Tiancheng Management Co each will own 10%.
The venture will produce specialist and next generation tobacco filters, which will be manufactured locally in a new facility in Xiamen, south east China.
Essentra said the venture will require about GBP16 million investment, which will be split up by respective shareholding. The venture is still subject to formal approval from regulatory authorities in China.
"Essentra and China Tobacco Fujian will cooperate closely to obtain the necessary regulatory approvals as soon as possible," the company said.
The new construction plant is expected to open in the first quarter of 2020, with first production "at the earliest" expected in November 2020.
Essentra Chief Executive Paul Forman said: "I am very pleased to secure this particular strategic 'game changer' for Filters. The JV's onshore development and testing facility, together with local production, will enable us to work ever more closely with our partners in China to provide innovative special filter solutions."
Shares in Essentra were 0.1% higher in London on Wednesday at 427.60 pence each.
By Paul McGowan; [email protected]
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