Dealmakers: Star Tissue takes a leading roll

Khalid Saifullah is excited for the future. He believes the sale of his family business to a big-name European player in its sector will act as a catalyst for spectacular growth.

Looking ahead, he talks of the potential for the Blackburn-based tissue products manufacturer to become a billion-pound operation in years to come.

Reflecting on the deal he adds: “It has been an incredible journey so far. It just shows just where you can take something.”

Founded in 2003, Star Tissue has already grown to become one of the UK’s leading independent makers of hygiene paper products that include toilet rolls and kitchen towels.

Today it has a 130-strong workforce and turns out a wide range of high quality goods. It also holds a significant market position, with three fully automated state-of-the-art converting lines, a warehouse and modern office space – the result of continuous investment from its owners.

That ownership has now changed. In one of the first major deals to be announced in 2024, Star Tissue has been acquired by WEPA Professional. No figure has been made public but it is reported to be a multi-million pound deal.

The hygiene and washroom specialist is part of a wider family run business, headquartered in Germany and operating 13 European production sites. With its company headquarters in Arnsberg-Müschede, near Dortmund, the group employs 4,000 staff and has a turnover of more than £1bn.

It is also reported to be the third largest manufacturer of hygiene paper on the continent. The Star deal will see production continue in Blackburn and no changes to staffing levels.

The plant has a converting capacity of 27,000 tonnes a year. Khalid, whose late father founded the business, has retained his role as managing director and Star Tissue is now trading as WEPA Professional UK.

Announcing the completion of the deal, Andreas Krengel, chief executive of the professional business unit at the WEPA Group, said: “WEPA stands for the production of high-quality tissue paper, and the UK market is strategically important for us.

“We are delighted to continue the impressive growth of Star Tissue with managing director Khalid Saifullah and his team.”

WEPA first approached Star Tissue in the middle of last year. It wasn’t the only company interested in acquiring the business.

Explaining the background behind the deal, Khalid told Lancashire Business View: “As we continued to grow year-on-year we became attractive to our competition and to other European players. As a result, we were approached by a number of companies.

“Selling wasn’t the end game. We are from Blackburn, have lived here all our lives and we were focused on building a strong business here. We have put a lot of investment into the company.

“However, the conversations we had with WEPA led us to recognise that this deal would be a good thing.

“It is a family business similar to ours. We share the same values and a focus on sustainability.

“They are good match as a management team and manufacturing will remain in Blackburn.

“The deal gives us the ability to grow the business further and take it to the next level.

“They recognised the strength of the company and want to make it stronger. The acquisition also strengthens their market share.”

He added: “I’m excited by the new relationship. We can fast track our growth with the level of experience and resource WEPA has, and really take the business forward.

“It is a great opportunity and with their paper mills they also give us more security in a volatile world when it comes to supply.

“All in all, it gives us a lot more potential to get to where we want to be and we have some exciting times ahead.”

In another new year-announced deal in the sector, Blackburn based AIM-listed tissue products manufacturer Accrol has expanded its product range and capacity with the acquisition of Somerset-based Severn Delta.

The firm, which has annual revenues of £5m, specialises in the production of wet wipes and tumble dryer sheets.

The deal was completed for an EBITDA multiple of less than 3x before synergies and was funded from the Blackburn-based group’s existing cash reserves.

Accrol highlighted its successful acquisition and integration of Welsh wet wipe maker John Dale in April 2021 as a model for scaling its business at pace.

Gareth Jenkins, Accrol chief executive, said: “Severn Delta enhances our market share in the wet wipe segment and extends our product range, adding further personal care and household wipes.

“The business currently operates four production lines which we believe can be utilised further to support our customers with their growth and generate a significant return on investment.”