How Mondi does acquisitions

Mondi AG Wolfgang Berger at AWA M&A

Mondi AG's Wolfgang Berger at the AWA M&A Executive Forum 2010.

Want to be successful in your next acquisition? Remember these three points: Get the right target. Get the right price. And follow up with the right post-merger integration. That’s the advice of Wolfgang Berger, Mondi AG head of strategy and business development. He spoke Tuesday at the Mergers & Acquisitions Executive Forum in Chicago, organized by AWA Conferences.

Mondi Group, an international paper and packaging maker, had 2009 sales of US$6.25 billion. With key operations in Europe, Russia, South Africa and the US, the converter produces a broad range of extrusion-coated materials as well as food- and non-food packaging and custom release liners.

So, how did Mondi go from a footnote in the release-liner market to a joint global market leader? “We acquired our first release-liner operation, Mondi Inncoat, in 2000 as part of a much larger acquisition,” Berger said. This segment wasn’t core to the company at the time, and being such a small player wasn’t consistent with its overall growth strategy. By 2005, Mondi decided to go into acquisition overdrive because “release liner is an attractive, growing market and becoming a leader was considered possible,” Berger explained. “There are strong synergies with our extrusion-coating business, and part of the raw material is already produced by us so vertical integration was possible.”

Step 1: Become a significant player. Mondi screened the market for possible targets through its own research and contacts with investment banks. In January 2006, it acquired Akrosil (Thilmany) with two plants in the US and one in The Netherlands. “After this, Mondi became the No. 2 release-liner producer globally, and the only one except the market leader (Loparex) with operations on more than one continent,” Berger said.

Step 2: Catch up with market leader. Mondi was now getting a reputation as an active acquirer by both investment banks and business owners seeking divestiture. In October 2006, it purchased Schleipen & Erkens (two plants in Italy and Germany), and acquired NBG (one Austrian plant) in December 2006. “After these, Mondi became the joint market leader in Europe,” he said, “and came closer to [Loparex] globally.”

Step 3: Attain market leadership. In 2008, Mondi acquired several operations from Loparex (one in Finland, one in the UK, three terminals in Poland, Thailand and Japan, and the European sales offices). “We expanded our footprint to Asia to become a truly global player,” Berger explained. “There were also significant synergies with Mondi’s European operations.”

Buying companies is one thing. Integrating them is another. Mondi’s post-merger integration process included upgrading the businesses to Mondi safety standards; focusing on retaining customers; fitting management to Mondi’s organization; creating a joint sales force; moving certain local functions to headquarters; combining procurement activities; investing in plant modernization; and uniting ops to increase capacity utilization and to save fixed costs.

What’s ahead? A new silicone-coater for the Mondi Jülich site. The US$3.6-million line in Central Europe is designed for label and tape release liners, and production startup is expected in Q4 2010. Mondi will also “investigate further brownfield and greenfield expansions in Europe, the US and Asia,” Berger said. “We’ll continuously monitor the M&A market for further acquisitions.”

My Thoughts: Throughout the entire “release-liner acquisition process,” Mondi never wavered from its Growth Strategy’s Three Pillars: Build a Leading Market Position, Maintain a High-Quality, Low-Cost Asset Base, and Focus on Performance. Your acquisition plan should be no different. Make sure you know exactly why you’re buying what you’re buying and how the purchase helps you meet your goals. Otherwise, look elsewhere.

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