MM Group carves out its packaging division to KPS in a 2.4 billion euro transaction

The European packaging landscape is undergoing a massive structural shift. Mayr-Melnhof Karton AG, known globally as MM Group, has signed a definitive agreement to sell a 70% majority stake in its packaging division to the New York-based private equity firm KPS Capital Partners. The transaction values MM Packaging at an enterprise value of €2.4 billion, effectively splitting the Austrian giant's historical integrated model into two distinct operational paths.

Under the terms of the agreement, KPS will control the newly formed standalone company, while MM Group retains a 30% equity interest. This carve-out allows MM Group to pivot its primary focus entirely toward its Board & Paper business, a sector where it already holds a dominant European market position.

Financial mechanics and shareholder impact

The financial architecture of the deal reflects a valuation multiple of approximately 9x the estimated 2026 adjusted EBITDA. For MM Group, the transaction is expected to generate net cash proceeds between €1.8 billion and €1.9 billion upon completion. The company's management has outlined a clear capital allocation strategy for this liquidity injection.

• Debt reduction to strengthen the balance sheet.
• Funding for future strategic opportunities in the board and paper sector.
• A planned special distribution to shareholders ranging from €0.5 billion to €0.6 billion.

The new MM Packaging footprint

The divested entity will continue to operate under the MM Packaging name. It encompasses the Food & Premium Packaging operations—excluding facilities in Iran and Tunisia—alongside the highly lucrative Pharma & Healthcare Packaging division. This represents a massive industrial footprint comprising over 50 production sites across 19 countries and a workforce of approximately 8,500 employees. MM Packaging currently stands as the world’s largest producer of secondary pharmaceutical packaging and a leading European manufacturer of folding cartons for the food sector.

Michael Psaros, Co-Founder and Co-Managing Partner of KPS Capital Partners, emphasized the operational foundation of the acquisition, noting that MM Packaging is an industry-leading business that the firm intends to scale further as an independent entity. KPS brings significant experience in industrial carve-outs and managing large-scale global manufacturing operations.

Strategic decoupling and future supply lines

For decades, MM Group's strength lay in its integrated model, feeding its own cartonboard into its converting facilities. While the corporate structure is separating, the industrial link remains intact. The two entities have secured a long-term cartonboard supply agreement, ensuring that MM Group's Board & Paper division will continue to provide raw materials to MM Packaging.

Peter Oswald, CEO of MM Group, framed the transaction as a catalyst for both divisions. According to Oswald, the deal allows MM Packaging to accelerate its growth trajectory under KPS's leadership, while the retained 30% stake ensures MM Group will still participate in the future value creation of the converting business.

The transaction, which has already received approval from MM Group's supervisory board, is expected to close in the first half of 2027, pending customary corporate and regulatory approvals, as well as worker consultation processes in France. Once finalized, MM Group will account for its remaining stake using the equity method, marking the beginning of a new, highly specialized era for the historic Austrian papermaker.