South Africa-based paper and packaging firm Mondi has signed an agreement with Graphic Packaging subsidiary Graphic Packaging International to acquire its bags and kraft paper business, for around $105m.

As part of the deal, Mondi will acquire Multi-wall Bag business, comprising nine Multi-wall Bag converting plants located across the US and the Pine Buff, Arkansas kraft paper mill.

With the sale of these non-core assets, Mondi seeks to grow its presence in the world's largest economy.

According to Graphic Packaging, the Multi-Wall Bag plants and kraft mill have generated around $437m revenue in the year to end-March.

The Arkansas kraft paper mill has a production capacity of about 135,000t annually.

Graphic Packaging chairman, president and chief executive officer David Scheible said the divestiture will free up valuable resources and allows the firm to focus completely on core paperboard packaging business.

"The anticipated sale of these non-core assets substantially completes our transformation into a pure play, vertically integrated paperboard packaging company," Scheible added.

The transaction, which is expected to be completed in late second quarter or early third quarter 2014, is subject to standard closing requirements.

Kraft paper and industrial bags supplier Mondi plans to fund the acquisition from existing resources.

Headquartered in Atlanta, Georgia, Graphic Packaging provides packaging solutions to food, beverage and other consumer products companies.

The firm produces folding cartons, coated-unbleached kraft, coated-recycled boxboard multi-wall bag and specialty packaging.

Image: Mondi will buy Graphic Packaging's bags and paper business for $105m.Photo: courtesy of Phiseksit/ FreeDigitalPhotos.net.