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27 Business combination


On 25 February 2021, the Company acquired the remaining 50% of the shares of its two joint ventures in the Middle East (Al Obeikan SIG Combibloc Company Ltd. in Saudi Arabia and SIG Combibloc FZCO in UAE) from its joint venture partner OIG. The joint ventures have thereby become fully owned subsidiaries of SIG. SIG and OIG commenced their partnership in 2001.

The former joint ventures provide aseptic carton packaging solutions in their respective geographic markets. Al Obeikan SIG Combibloc Company Ltd. operates a sleeves production plant in Saudi Arabia from which it supplies sleeves to its customers and to SIG Combibloc FZCO. Both of the entities deploy filling lines in the Middle East and Africa and provide sleeves and other associated products and services to their customers. They have approximately 500 full-time employees. The acquisition gives the Group control over a business with strong growth prospects in a growing market and expands its global presence.

The following table provides an overview of the consideration transferred, the recognised amounts of assets acquired and liabilities assumed at the acquisition date, the fair value of the pre-existing interest held by the Group prior to the acquisition and the resulting goodwill. It reflects the final outcome of the acquisition accounting.

(In € million)






Shares (17,467,632 ordinary SIG shares)



Fair value of consideration transferred



Cash and cash equivalents



Trade and other current receivables






Property, plant and equipment



Right-of-use assets



Intangible assets



Trade and other current payables



Loans and borrowings



Deferred tax liabilities



Other current and non-current liabilities



Other net liabilities acquired



Fair value of identifiable net assets acquired (100%)



Fair value of consideration transferred



Fair value of pre-existing interest



Total consideration



Fair value of identifiable net assets






The amount of “Other net liabilities acquired” in the consolidated interim financial statements for the six months ended 30 June 2021 was determined on a provisional basis. An additional liability of €5.9 million has, based on new information about facts and circumstance that existed at the acquisition date, been recognised as part of the acquisition accounting. As a result, goodwill has increased from the initially reported amount of €512.5 million to €518.4 million.

For the ten months ended 31 December 2021, the acquisition of the former joint ventures contributed incremental revenue of €166.0 million and a gain of €8.5 million (excluding the gain on pre-existing interest in the former joint ventures and transaction costs but including fair value adjustments) to the Group’s result. If the acquisition had occurred on 1 January 2021, management estimates that for the year ended 31 December 2021, consolidated revenue would have been €2,077.8 million and consolidated profit would have been €173.7 million. In determining these amounts, management has assumed that the fair value adjustments as of the acquisition date would have been the same if the acquisition had occurred on 1 January 2021.

The Group has incurred total acquisition-related costs of €7.9 million in 2020 and 2021, of which €6.5 million have been booked in the year ended 31 December 2021 (as part of other expenses).

Consideration transferred

The Group transferred €167.0 million in cash and 17,467,632 newly issued SIG ordinary shares with a fair value of €323.3 million to OIG as consideration for the remaining shares of the joint ventures on 25 February 2021. The shares were issued out of authorised share capital on 22 February 2021 (see note 24). The fair value of the shares was determined by reference to SIG’s closing share price of CHF 20.50 on 24 February 2021 as the acquisition was completed prior to the opening of SIX Stock Exchange on 25 February 2021. As the acquisition has been completed using a locked box valuation approach, there have been and will be no post-closing adjustments to the consideration transferred.

Identifiable net assets acquired

The intangible assets of €149.2 million mainly comprise customer relationships (€146.1 million). The useful lives of customer relationships are assessed to be ten years. The property, plant and equipment balance primarily comprises production equipment and filling lines deployed under contracts that qualify to be accounted for as operating leases. The fair value of trade receivables was €45.7 million. Trade receivables comprised gross contractual amounts due of €58.5 million, of which €12.8 million was expected to be uncollectible as of the acquisition date.


The business combination resulted in goodwill of €518.4 million that has been allocated to the new segment MEA (see note 14). The goodwill mainly comprises expectations about future new customers, entrance into new markets and the skills and competence of the workforce. There are no specific synergies or cost savings expected. The goodwill is not expected to be deductible for tax purposes.

Gain on pre-existing interest

The remeasurement to fair value of the Group’s pre-existing 50% interest in the former joint ventures resulted in a gain of €48.8 million. The gain is recognised as part of other income (see notes 8 and 9) and is calculated at the acquisition date as follows:

(In € million)



Fair value of pre-existing interest



Carrying amount of pre-existing interest



Reclassification of amounts in foreign currency translation reserve to profit or loss



Gain on pre-existing interest in joint ventures



Assessment of fair values

The Group applied generally accepted valuation methods in the assessment of the fair values of the acquired net assets. The fair value of the customer relationships was assessed by applying the multi-period excess earnings method. For property, plant and equipment, the fair values were primarily assessed by using the cost approach (the direct cost approach where possible). The fair value of inventories was estimated based on the estimated selling price in the ordinary course of business less the estimated cost of completion and sale, and a reasonable profit margin.

The fair value of the Group’s pre-existing 50% interest in the former joint ventures has been assessed using the discounted cash flow method. The Group applied a unit of account approach where the fair value of the interest in the former joint ventures as a whole (100% interest) was assessed, taking into consideration a control premium. A control premium was applied as the Group has moved from only having joint control to having full control. Management believes that it can therefore more efficiently and effectively manage the strategy, operations and resources of the former joint ventures to increase the cash flows generated by these entities.

Accounting policy

Business combinations are accounted for using the acquisition method at the acquisition date when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group.

The consideration transferred is generally measured at fair value, as are the identifiable net assets acquired. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Goodwill is measured at the acquisition date as the fair value of the consideration transferred (including, if applicable, the fair value of any previously held equity interests and any non-controlling interests) less the net recognised amount (which is generally fair value) of the identifiable assets acquired and liabilities assumed. If the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

Any contingent consideration is measured at fair value at the acquisition date. If such a contingent consideration depends on the achievement of future earnings or other performance targets, any changes in the fair value are recognised in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities incurred in connection with a business combination, are expensed as incurred.

In a business combination achieved in stages, the equity interest in the acquired entity that was held by the Group before obtaining control is treated as if it was sold and subsequently repurchased. The pre-existing interest in the acquired entity is remeasured at fair value at the acquisition date. Any resulting gain or loss is recognised in profit or loss. Amounts recognised in other comprehensive income in prior periods that are related to the previously held interest are treated on the same basis as if the Group had disposed of the interest to a third party.

Significant judgements and estimates

Significant judgements and estimates were made by management relating to the accounting for the acquisition of the remaining shares of the joint ventures in the Middle East. For example, the assessment of the fair value and the useful lives of the customer relationships and the assessment of the fair value of the pre-existing interest in the former joint ventures involved significant judgement and estimates.