Bunzl sells Fine Paper for £138m

NEW FTSE 100 entrant Bunzl is selling its Bunzl Fine Paper distribution unit to Australian papermaker PaperlinX for £138m. Bunzl Fine Paper has annual sales of about £320m and holds a 14% share of the paper merchanting and distribution market in Britain and Ireland.

PaperlinX, Australia's largest paper company, said the acquisition would be partly funded by a placing of new shares to institutional investors.

'Bunzl Fine Paper provides PaperlinX with a strong platform from which we can participate in the ongoing paper merchant rationalisation throughout the UK and continental Europe,' said PaperlinX managing director Ian Wightwick.

PaperlinX has earmarked about A$400m (£153m) for acquisitions in Europe and the US, but the consensus among analysts today was that the company had overpaid for Bunzl Fine Paper, given its small market share. Wightwick, however, said he believed PaperlinX had 'paid a fair price for a very good business'.