Sidlaw Bought Out By Danisco

Scottish packaging group Sidlaw Friday agreed to a GBP 106 million takeover bid from Copenhagen-listed Danisco, taking yet another company out of Britain's dwindling paper and packaging sector. In the past week Field Group has agreed to a GBP 218 million bid from U.S. rival Chesapeake, and Low & Bonar and Waddington have issued profits warnings.

Analysts predict the sector, which now boasts fewer than a dozen sizeable companies, is bound to shrink further. John Durston, chief executive of Sidlaw, who was brought in to turn the company around in October 1996, said: "There is growing competition across Europe. Our customers are increasingly either pan-European or multinational like Unilever, Nestle and Mars. They want to buy packaging across Europe."

"Economies of scale are going to be very important over the next few years both in terms of purchasing power and factory size," Durston added. "Although we had done everything right in terms of turning the business around and had a very strong balance sheet we knew that we had to find a suitable partner to take things forward." Durston said the stock market rating of smaller companies had made it impossible for Sidlaw to fund its expansion plans with its own paper.

Danisco, which is capitalized at GBP 1.7 billion, supplies packaging from factories throughout Europe.

Analysts say David S Smith, Waddington and even GBP 1 billion-rated Arjo Wiggins could be vulnerable bids as the European industry consolidates and U.S. majors increasingly look beyond their own shores for expansion.