30th Sep 2014 08:43
LONDON (Alliance News) - Powerflute Oyj shares were higher in morning trade on Tuesday after the company said it has entered into a conditional agreement to buy cores and coreboard producer Corenso from Finnish pulp and paper manufacturer Stora Enso Oyj in an EUR81 million deal.
Paper and packaging company Powerflute said the deal would constitute a reverse takeover and said the deal would be immediately earnings accretive. Powerflute said it will hold an extraordinary general meeting on November 4 to vote on the agreement.
Powerflute said it would fund the deal with existing cash resources and new debt facilities totalling EUR120 million, including an EUR80 million bond issue and a EUR40 million revolving credit facility.
Stora Enso will continue to be Corenso's biggest customer and has entered into a core supply agreement for five years, Powerflute said.
Powerflute also posted its results for the six months to June 30, with pretax profit increasing 31% to EUR6.9 million, from EUR5.2 million a year earlier. Revenue in the period was up 10% to EUR72.7 million from EUR66.3 million a year earlier.
Dermot Smurfit, chairman of Powerflute, said the company's order intake in the third quarter has been healthy and said average pricing levels have been maintained in most major markets. He said the outlook for the second half looks "broadly positive".
Shares in the company were up 21% to 43.50 pence on Tuesday, making it one of the best performers on the AIM All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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