Bong acquires envelope production in Estonia

Kristianstad 3 February 2006

Bong Ljungdahl AB (publ.) has signed an agreement to acquire the American office supply company SMEAD’s envelope factory in Kohila, Estonia. The unit’s production consists primarily of consumer-packaged envelopes that are sold to customers in several countries through SMEAD’s European sales organisation. The envelope factory in Kohila, which is part of a larger production facility for various office supplies, has some 35 employees and an annual production capacity of around 250 million envelopes. The purchase price is approximately SEK 10 million on a debt-free basis. The acquisition includes envelope machines, other production equipment and the entire inventory of raw materials and finished envelopes. Of the total purchase price, finished goods inventories account for an estimated SEK 3 million. Bong will take over all of the unit’s employees and continue production in the existing leased premises. The transaction is expected to be completed in the first quarter of 2006. “We are well acquainted with the factory in Kohila since it was previously part of UPM-Kymmene’s Finnish envelope business, which was acquired by Bong in 1998. The factory in Kohila has a highly competent staff and very cost-effective manufacturing”, says Bong’s CEO & President Anders Davidsson. “It is strategically important that we can give our customers a competitive offering of consumer-packaged envelopes and support our fast-growing Baltic units with local production.” Bong’s annual sales will increase by an estimated SEK 20 million through the acquisition. The transaction is expected to have a positive impact on the Group’s earnings starting from the second half of 2006. The acquisition will be fully financed through the utilisation of already existing and committed credit facilities.

About Us

Bong is one of the leading providers of specialty packaging and envelope products in Europe and offers solutions for distribution and packaging of information, advertising materials and lightweight goods. Important growth areas in the Group are packaging within retail and e-commerce and the envelope market within Eastern Europe. The Group has annual sales of approximately SEK 2.1 billion and about 1,400 employees in 14 countries. Bong has strong market positions in most of the important markets in Europe and the Group sees interesting possibilities for continued development. Bong is a public limited company and its shares are listed on Nasdaq Stockholm (Small Cap).