Acquisitions, investments and divestments

Acquisition of BSN medical

On April 3, 2017, the Group closed the acquisition of BSN medical, a leading medical solutions company. BSN medical develops, manufactures and sells products within wound care, compression therapy and orthopedics. The purchase price for the shares amounts to EUR 1,394m, and takeover of net debt to EUR 1,321m. Essity has consolidated BSN medical as of April 3, 2017.

BSN medical has since the date of acquisition had an impact of SEK 6,301m on consolidated net sales and SEK 1,150m on adjusted EBITA. BSN medical is included in the Personal Care business area.

The BSN medical acquisition is an excellent strategic fit for Essity, and supports the company’s vision: Dedicated to improving well-being through leading hygiene and health solutions, two closely interlinked areas. Essity’s incontinence business, with the globally leading TENA brand, shares similar positive market characteristics, customers and sales channels with BSN medical, which provide opportunities for accelerated growth through cross-selling.

BSN medical, with well-known brands such as Leukoplast, Cutimed, JOBST, Delta-Cast and Actimove, has leading market positions in several attractive medical solutions product categories and provides a new growth platform with future industry consolidation opportunities. The acquisition is expected to generate annual synergies of at least EUR 30m with full effect three years after closing. The company has high cash conversion and an asset-light business model.

Capital expenditures

To further strengthen competitiveness and enable future growth in the tissue operations in Mexico, Essity has decided to invest about USD 105m (approximately SEK 950m) in one of the company’s facilities in the country. The investment in Mexico will support Essity’s high-quality tissue offering under the Regio brand. The investment is aligned with the company’s strategy to streamline production and secure capacity for future growth.

To meet the growing demand for high-quality tissue and strengthen the product offering in the UK, Essity is investing in a through-air drying (TAD) machine at its tissue plant in Skelmersdale.

Furthermore, to strengthen its baby care product offering in Europe, Essity has also decided to invest about EUR 40m (approximately SEK 380m) in facilities in Europe.

Divestments

During 2017, Essity divested the tissue facility in Chesterfield to Sidcot Group Limited for a purchase consideration of about GBP 3m (approximately SEK 35m).