Stora Enso and Arauco Buy Ence's Uruguay Assets
May 18, 2009 - Stora Enso and Arauco have signed a definitive purchase agreement with the Spanish pulp producer Grupo ENCE for the joint acquisition on a 50/50 basis of approximately 130,000 hectares of owned land and plantations, 6 000 hectares of leased lands and other operations owned by Grupo ENCE in the central and western areas of Uruguay.
The value of the deal is US$344 million (EUR 253 million), including US$33 million of assumed debt.
Stora Enso and Arauco intend to combine their existing assets in Uruguay with the newly acquired operations.
"This is an important step for Stora Enso, given that cost-competitive plantation-based pulp is a cornerstone of our strategy," said Jouko Karvinen, CEO, Stora Enso.
"Joining forces with Arauco gives us a total land base of approximately 250 000 hectares, nearly half of which is planted with hardwood and softwood. In one step, this transaction will secure the strategic raw material supply for a world class pulp mill in Uruguay that we are planning jointly with Arauco," said Karvinen.
However, Karvinen cautioned that it is much too early to talk about contruction of a pulp mill.
"No decision on building the mill has been taken yet. The mill investment decision will be based on appropriate feasibility and investment studies, and market conditions, and require formal approval by both partners and Uruguayan authorities,'' Karvinen said.
After the transaction Stora Enso and Arauco together will be the largest private landowner and one of the largest owners of plantations in Uruguay.
Stora Enso said both partners are committed to sustainable plantation management. ENCE's plantations have received FSC (Forest Stewardship Council) certification, and both Stora Enso and Arauco will continue to work towards FSC certification of the new joint-venture operations.
The deal with ENCE also includes mill sites under development at Punta Pereira and M'Bopicua, a port and barge terminal, a woodyard and chipping plant and a nursery.
ENCE will retain its Atlantic region forestland, a related shipping terminal, a sawmill and, in Montevideo, a chipping plant with woodyard as its sole operations in Uruguay.
The deal is expected to close by the end of 2009.
Arauco is one of the largest forestry companies in Latin America.The company manufactures 3 million tonnes of market pulp, 3.4 million cubic metres of sawn lumber and 2.6 million cubic metres of wood panels per year. It holds forestry operations in Chile, Argentina, Brazil and Uruguay and sells its products in more than 60 countries, with total sales in 2008 of US$3 689 million.
SOURCE: Stora Enso