AM Paper

A company offering independent retailers alternative toilet tissues with competitive prices

AM Paper.jpg

In 1997 Montagu led the £145 million (€232 million) buyout of AM Paper Group. This deal highlighted how Montagu 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 AM 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.

Montagu's relationship with Alan Murphy had developed over time. A deal was agreed whereby Murphy retained a significant minority stake with Montagu 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 Montagu invested further funds to enable AM Paper to acquire Penington Paper Products in a £20 million (€32 million) deal. This bolt on acquisition highlights our proactive approach and willingness to support our portfolio companies in making 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.

Deal details

Deal type: Institutional Buyout Investment Year: 1997 Country: United Kingdom Status: Realised Value: £145 million Industry Sector: Industrials