STORA and Enso, in a merger of equals
STORA and Enso, in a merger of equals, form world's largest paper and packaging board company Helsinki and Stockholm, June 2, 1998. The boards of Enso and STORA have agreed to combine the two companies to create the world's largest paper and packaging board producer, to be known as STORA ENSO. The merger has the full and active support of the principal owners, the Finnish state and Investor. This Nordic combination creates a global company with significant cost synergies and a strong base for strategic growth. 1 The combined group, with 1997 sales of close to SEK 90 billion / FIM 60 billion and some 40,000 employees, will have total production capacity of over 13 million tons. STORA ENSO will be a strong player in its three key areas of focus: publication papers, fine papers and packaging board. Other important areas include sawn goods, as well as significant forest and power generation holdings. "The merger is based on the excellent strategic fit between these two strong companies, creating a global player in an increasingly competitive industry," says Claes Dahlbäck, chairman of the board of STORA. "The new group will yield significant benefits to shareholders." In addition to its overall scale, wider production mix and leading position in Europe, supported by stronger R&D, STORA ENSO will have an expanded global presence in North and South America and Asia, providing a solid base for further strategic growth. "The merged group will have far greater resources to more efficiently serve global and local customers," says Jukka Härmälä, president and chief executive officer of Enso. "This Nordic combination will be a major competitive force in the international forest products industry, creating added value to customers." The merger will generate significant efficiency gains. In total, 2 combined yearly synergies are estimated at SEK 1.9 billion / FIM 1.3 billion (approximately 2% of combined sales) to be realized over 3-4 years, with limited effect in 1999, and full effect by 2002. Key synergies include streamlining production flows and specialization of mills, joint purchasing, coordination of transport and logistics, improved control of combined capital expenditures, and transfer of knowledge and competence. Initially, the new group anticipates a few hundred job reductions from duplications in sales and administration, primarily through natural attrition, but the company expects that future global growth will be good for employment opportunities. "By extending ongoing cost and capital efficiency programs, STORA ENSO will become an industry leader in terms of profitability and productivity, with strong potential for profitable growth," says Björn Hägglund, president and chief executive officer of STORA. Claes Dahlbäck is designated as chairman of STORA ENSO, Jukka Härmälä as chief executive officer and Björn Hägglund as deputy chief executive officer. Additional STORA ENSO merger information 1 USD 12 bn, ECU 10 bn 2 USD 0.24 bn, ECU 0.22 bn 3 Preliminary adjustment to IAS, unaudited. 4 USD 11.5 bn, ECU 10.2 bn 5 USD 2.1 bn, ECU 1.9 bn 6 USD 8.7 bn, ECU 7.8 bn