Stora Enso has entered into an agreement to acquire Finnish sawmill company Junnikkala Oy.
According to Stora Enso, the deal will secure a cost-efficient wood supply to its packaging board site in Oulu, Finland, and will support its wood products business with new production assets.
Junnikkala Oy is a Finnish producer of sawn timber and processed wood products for domestic and export markets. It operates three sawmills in Finland including its new sawmill, which is less than 10km from the Stora Enso Oulu site.
The acquired sawmills will boost the integrated board site in Oulu through long-term supply of raw materials such as wood chips, pulpwood and internally sourced biomass.
The total enterprise value for the transaction is up to €137 million – Stora Enso says that a significant part of this is contingent upon achieving specific production milestones.
The deal will strengthen Stora Enso’s wood supply operations, with its annual wood procurement in Finland increasing by around 1.7 million cubic metres, and total saw-milling capacity increasing by around 700,000 cubic metres.
Hans Sohlström, Stora Enso’s president and CEO, said: “We are preparing for the start-up of our new converted packaging board line in Oulu and this acquisition will establish a solid foundation for our wood procurement. It will also further enhance operational efficiency and optimise the Oulu production site and sawmills as an integrated unit, while strengthening our wood products offering.”
The integration of the value chain will reduce costs and improve resource efficiency, providing Stora Enso with a balanced sawlogs and pulpwood supply.
Junnikkala’s sawmill operations will be fully incorporated into Stora Enso’s Wood Products division and the wood procurement activities will be integrated into its Forest division. Junnikkala Oy’s 230 employees will transfer to Stora Enso.
The transaction is subject to customary closing conditions including regulatory approvals and is expected to close in the first half of 2025.
Stora Enso to discontinue divestment of its Beihai production site in China
It’s been a busy month for Stora Enso. Last week, it announced the decision to discontinue the divestment process for its Beihai packaging board production site and forestry business, which was first announced in December 2022.
The decision to retain the assets came as Stora Enso agreed that the value of its own use of the assets exceeds the achievable transaction sum.
The Beihai site business will be developed through a continued focus on operational excellence, cost optimisation and product development.
By adjusting the product mix to increase the share of liquid packaging board and other premium grades, the Beihai site will strengthen Stora Enso’s position as a global supplier. Its other liquid packaging board production sites include Imatra, Finland, and Skoghall, Sweden, which together with Beihai, cater for global customers while also providing local customers with high-quality products.
Commenting on the decision, Sohlström said: “Following a thorough review and negotiations with potential buyers, we have decided to terminate the divestment process and focus on the ongoing business. We are confident that Stora Enso is the best positioned to continue operating this site going forward.”
“Given the recent global cost escalation of wood and logistics, the relative cost competitiveness of the Beihai site has improved. Through the Beihai site, we will continue to serve our global and most demanding customers with premium packaging board in the Asia Pacific region.”
Stora Enso owns approximately 80% of the Beihai production site and forest operations – its local partners and International Finance Corporation remain owners of the balance.
by Phoebe Fraser
Source: foodbev.com
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