Waddington seeks pounds 42m for Dutch buy: Packaging group breaks new ground in Europe

JOHN WADDINGTON, the packaging, printing and games group, is making its first excursion into the Continental European folding carton market with the pounds 41.7m acquisition of the Dutch company Imca. It is paying for it with a pounds 42m rights issue.

Waddington sells most of its cartons into the UK market, where it is a specialist in packaging for frozen food, chilled and microwaveable meals. Imca, market leader in the Netherlands, specialises in dry foods such as breakfast cereals and biscuits.

Martin Buckley, chief executive of Waddington, said it had become increasingly clear that larger multinational customers were moving towards international sourcing. Extending carton operations to service European food manufacturers in particular would bring long-term benefits.

In 1993 Imca, based at Hoogerheide in the Netherlands, made an operating profit of pounds 4m on sales of pounds 27m. Since it was founded in 1962 it has been owned and managed by Cornelis Baartmans, chief executive, who has agreed to make his services available in future.

Mr Buckley said the combination of the acquisition and rights issue would slightly dilute earnings in the current financial year but enhance the bottom line in subsequent years.

Two new shares are being offered at 190p for every seven held. Waddington shares closed 9p lower at 221p.

Mr Buckley said Waddington's carton operations had enjoyed significant growth in demand and volumes processed had risen 15 per cent in the past year. The company is spending pounds 5m at Waddingtons Cartons in Leeds to provide a 25 per cent uplift in capacity by next January.

He said the Imca purchase reinforced Waddington's strategy of concentrating on core operations where attractive returns were available.

Last year it paid dollars 5.4m to acquire Carthage Cup Company and set up a joint venture with Cartonmaster of Canada to provide access to the immediate-response sector of the folding carton market.

It has sold its Gilmour and Dean labels arm and its self-adhesive labels business and disposed of its main UK business forms operation. Over the past two years it has spent pounds 20.8m on capital items, with 59 per cent on packaging operations and most of the rest on specialist packaging.