MM Group to Sell 70% Stake in Packaging Business to KPS Capital Partners for €2.4 Billion

Mayr-Melnhof Karton AG (MM Group) has signed a binding agreement to sell a 70% stake in its Packaging business to private equity investor KPS Capital Partners, valuing the business at an enterprise value of €2.4 billion. MM Group will retain a 30% minority stake in the business following completion of the transaction.

The deal will transfer MM Group’s Food & Premium Packaging operations, excluding its businesses in Iran and Tunisia, as well as its Pharma & Healthcare Packaging operations, to a newly established holding company. KPS will own 70% of the new entity, with MM Group retaining the remaining 30% to participate in its future growth and value creation.

The transaction values the Packaging business at approximately nine times its estimated adjusted EBITDA for 2026. After accounting for an estimated investment of approximately €400 million for its retained equity interest, MM Group expects to receive net cash proceeds of approximately €1.8 billion to €1.9 billion upon completion. Final proceeds will depend on taxes, purchase-price adjustments and the timing of completion.

Under the agreement, MM Group's equity stake could be reduced from 30% to a minimum of 20% if certain EBITDA targets for the 2027 financial year are not achieved. No additional consideration would be payable by either party in that event.

Strategic Focus on Board & Paper

The transaction will separate MM Group's Packaging and Board & Paper businesses, allowing each operation to pursue independent growth strategies and capital allocation priorities.

Following completion, MM Group will focus on its Board & Paper business while continuing to participate in the Packaging business as a minority shareholder alongside KPS. A long-term cartonboard supply agreement will ensure continued supply from Board & Paper to the Packaging business.

The Packaging business is expected to pursue organic growth and selective acquisitions as an independent company, supported by KPS's experience in industrial carve-outs and operational improvement.

Debt Reduction and Shareholder Distribution

MM Group plans to use the transaction proceeds to repay debt, pursue strategic opportunities and distribute capital to shareholders.

Following completion, the company expects to have net cash of approximately €800 million to €900 million. It is planning a special distribution to shareholders of between €500 million and €600 million, subject to corporate approvals, legal and regulatory requirements, and prevailing business conditions.

MM Group CEO Peter Oswald said the transaction would allow the Packaging business to continue growing under KPS while enabling MM Group to participate in its future value creation through its retained shareholding. He added that the Board & Paper business would operate as an independent supplier to the packaging industry.

KPS Co-Founder and Co-Managing Partner Michael Psaros said the firm intended to use its industry experience, financial resources and manufacturing capabilities to support the growth of MM Packaging.

Completion Expected in First Half of 2027

Both Packaging and Board & Paper operations will continue as normal following the signing of the agreement. The Packaging business will remain part of MM Group until the transaction closes and will retain the MM Packaging name afterwards.

Completion is subject to corporate and regulatory approvals and customary closing conditions. For the French business, the acquisition is also subject to consultation processes with workers' representatives.

The transaction is expected to close in the first half of 2027. MM Group's Supervisory Board has approved the agreement. Following completion, its remaining 30% investment will be accounted for using the equity method.

J.P. Morgan is acting as sole financial adviser to MM Group, with Binder Grösswang and Linklaters LLP serving as legal advisers.