Stora Enso and Arauco join forces to create a leadership position in low-cost pulp through the acquisition of the majority of Grupo ENCE's operations in Uruguay for USD 344 million
STORA ENSO OYJ STOCK EXCHANGE RELEASE 18 May 2009 at 06.00 GMT
Stora Enso and Arauco, one of the largest forest industry enterprises in Latin America based in Chile, 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 enterprise value of the transaction is USD 344 (EUR 253) million, including USD 33 million of assumed debt. Stora Enso's share of the enterprise value is 50%. 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. 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. 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,” says Stora Enso CEO Jouko Karvinen. This partnership between Stora Enso and Arauco is a natural extension of the successful joint operation of the plantations and coated magazine paper mill at Arapoti in Brazil. After this transaction Stora Enso and Arauco together will be the largest private landowner and one of the largest owners of plantations in Uruguay. “Uruguay has exceptionally good conditions for growing plantation fibre, and its forestry sector is developing rapidly. We are very pleased to be participating in this development together with Stora Enso,” says Arauco CEO Matías Domeyko. Sustainably managed plantations are crucial to ensuring the long-term success of forestry businesses, providing jobs and supporting local development and income generation. Both partners are committed to sustainable plantation management. Grupo 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 transaction with Grupo 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. Grupo ENCE will retain its Atlantic region forest land, a related shipping terminal, a sawmill and, in Montevideo, a chipping plant with woodyard as its sole operations in Uruguay. Stora Enso and Arauco have not made any investment decision concerning the construction of a pulp mill in Uruguay. The transaction with Grupo ENCE is expected to close by the end of 2009. For further information, please contact: Jouko Karvinen, CEO, tel. +358 2046 21410 Nils Grafström, President, Stora Enso Latin America, tel. +55 1181 759 283 Lauri Peltola, Head of Group Communications, tel. +358 2046 21380 Ulla Paajanen-Sainio, VP, Investor Relations and Financial Communications, tel. +358 2046 21242 Previous press releases concerning the co-operation with Arauco are available at www.storaenso.com/press 1 November 2007: Stora Enso finalises partial divestment of Stora Enso Arapoti to Arauco 27 September 2007: Stora Enso sells some shareholdings in Stora Enso Arapoti to Arauco 26 October 2006: Stora Enso initiates exclusive discussions with Arauco about joint ownership regarding Stora Enso Arapoti in Brazil www.storaenso.com www.storaenso.com/investors Arauco is one of the largest forestry companies in Latin America. Its strengths are a long term view based on the sustainability of its production, size and yield of its plantations. Arauco 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 USD 3 689 million. Stora Enso is the world leader in forest industry sustainability. We offer our customers solutions based on renewable raw materials. Our products provide a climate-friendly alternative to many non-renewable materials, and have a smaller carbon footprint. Stora Enso is included in the Global 100 list of the world's most sustainable companies. Stora Enso is also listed in the Dow Jones Sustainability Index, the FTSE4Good Index, and the Climate Disclosure Leadership Index. Stora Enso employs 29 000 people worldwide, and our sales in 2008 amounted to EUR 11.0 billion. STORA ENSO OYJ Jari Suvanto Ulla Paajanen-Sainio