Paperlinx to sell Spicers Canada and withdraw from Canadian market

Thursday, Feb 12, 2015

Australian paper merchant Paperlinx plans to part with its Canadian subsidiary Spicers Canada. The company announced on 11 February that it had signed an agreement to sell the operations to Central National-Gottesman (CNG) for CAD63m. The transaction requires approval from Canada's Competition Bureau and is expected to be completed at the end of February.

Spicers Canada is headquartered in Vaughan, Ontario. According to CNG, the company is one of the leading distributors of fine paper, sign and display media, industrial packaging and graphic arts supplies in the country. Its operations include 15 warehouse locations throughout Canada, as well as sheeting facilities and cash-and-carry stores. Spicers Canada employs almost 500 people and booked an underlying EBIT of CAD15.5m in 2014, according to Paperlinx. The company, which has been in business for more than 70 years, would continue to operate as an independent company, said CNG.

Paperlinx explained that it had worked hard to reposition Spicers Canada into a successful business, managing to increase its earnings in the past five years. "However, the business has reached an inflection point in relation to its earnings potential unless significant additional capital is invested to preserve and enhance value", said the merchant.

In 2012, Paperlinx had already sold its US paper operations to CNG as part of its restructuring process. The deal covered the merchants Spicers Paper USA and Kelly Paper. This meant that the ownership of 12 warehouses and 48 paper stores changed hands.

CNG is a distributor of pulp, paper, tissue, packaging and plywood headquartered in Purchase, NY. The company said the acquired business would be integrated into its Distribution division which includes the merchants Lindenmeyr Munroe, Spicers Paper in the US and Kelly Paper.


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