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Interested in contacting us about this deal?
Jason GatenbyChief Executive
T: +44 20 7336 9947
E: jason.gatenby@ montagu.com
Detailed Information
In 1997 HSBC Private Equity led the £145million (€232 million)
buyout of AM Paper
Group. This deal highlighted how HSBC Private Equity can work with the owners of
a private business to realise wealth for its founders and provide an appropriate
funding package to enable significant investment in plant and machinery.
AM Paper was founded in 1983 by Alan Murphy, as CEO and principal shareholder,
and Steve Sealey, when they purchased a second hand machine for converting
parent reels in to toilet tissue. The company’s strategy was originally to offer the
independent retailer and cash and carry trade value for money toilet tissue as an
alternative to the premium priced branded product that dominated the market at that
time.
A major breakthrough came in the early 1990’s when, following the arrival of new
entrants in the retail market, the major UK supermarkets required an economy own
label product. This new demand provided further opportunities for AM Paper which
continued to invest and grow. Over the next few years AM Paper and other own
label suppliers improved the quality of their offering to match that of the branded
manufacturers.
During 1997 A M Paper had the opportunity to further enhance its capabilities and
also its relationship with the large multiples by constructing a new mill using Through
Air Dried (‘TAD’) technology, a state-of-the-art technology that was unique in the UK
private label market. This would provide a step change in AM Paper’s growth but
required substantial capital investment.
HSBC Private Equity’s relationship with Alan Murphy had developed over time. A
deal was agreed whereby Murphy retained a significant minority stake with HSBC
Private Equity and management holding a majority. We were successful due to our
ability to structure a financial package to ensure the founder retained a significant
interest and to incorporate appropriate financing for the capital investment in the
new mill. Additionally, we were actively involved with management in attracting new
expertise to fill skills gaps in the team.
During 1998 HSBC Private Equity invested further funds to enable AM Paper to
acquire Penington Paper Products in a £20 million (€32 million) deal. This bolt on
acquisition highlights HSBC Private Equity’s proactive approach and willingness to
invest further funds into its investments for acquisitions. In September 1999 A M
Paper was sold to SCA for £192 million (€307 million) as part of SCA’s strategic
growth plan for Europe. This provided the shareholders with excellent returns in a
period of only 20 months.
Group. This deal highlighted how HSBC Private Equity can work with the owners of
a private business to realise wealth for its founders and provide an appropriate
funding package to enable significant investment in plant and machinery.
AM Paper was founded in 1983 by Alan Murphy, as CEO and principal shareholder,
and Steve Sealey, when they purchased a second hand machine for converting
parent reels in to toilet tissue. The company’s strategy was originally to offer the
independent retailer and cash and carry trade value for money toilet tissue as an
alternative to the premium priced branded product that dominated the market at that
time.
A major breakthrough came in the early 1990’s when, following the arrival of new
entrants in the retail market, the major UK supermarkets required an economy own
label product. This new demand provided further opportunities for AM Paper which
continued to invest and grow. Over the next few years AM Paper and other own
label suppliers improved the quality of their offering to match that of the branded
manufacturers.
During 1997 A M Paper had the opportunity to further enhance its capabilities and
also its relationship with the large multiples by constructing a new mill using Through
Air Dried (‘TAD’) technology, a state-of-the-art technology that was unique in the UK
private label market. This would provide a step change in AM Paper’s growth but
required substantial capital investment.
HSBC Private Equity’s relationship with Alan Murphy had developed over time. A
deal was agreed whereby Murphy retained a significant minority stake with HSBC
Private Equity and management holding a majority. We were successful due to our
ability to structure a financial package to ensure the founder retained a significant
interest and to incorporate appropriate financing for the capital investment in the
new mill. Additionally, we were actively involved with management in attracting new
expertise to fill skills gaps in the team.
During 1998 HSBC Private Equity invested further funds to enable AM Paper to
acquire Penington Paper Products in a £20 million (€32 million) deal. This bolt on
acquisition highlights HSBC Private Equity’s proactive approach and willingness to
invest further funds into its investments for acquisitions. In September 1999 A M
Paper was sold to SCA for £192 million (€307 million) as part of SCA’s strategic
growth plan for Europe. This provided the shareholders with excellent returns in a
period of only 20 months.