MercoPress. South Atlantic News Agency

Stora Enso and Arauco complete acquisition of Ence in Uruguay

The operation involved 130.000 hectares of land with eucalyptus

Finland’s Stora Enso and Chile’s Arauco have completed the acquisition of the majority of Grupo Ence operations in Uruguay originally announced on 18 May 2009, according to a release this Friday in Helsinki.

The joint acquisition on a 50/50 basis includes 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.

As previously announced, the enterprise value of the transaction, which was completed ahead of the original target of the end of 2009, was 344 million US dollars, including 33 million USD of assumed debt. Stora Enso's share of the enterprise value is 50%.

“I'm very proud that our team in seamless co-operation with Arauco has been able to finalise this project ahead of the original schedule. That is a promising start and will give us a solid platform to go forward with our joint venture and plans in Uruguay,” says Stora Enso CEO Jouko Karvinen.

“Cost-competitive plantation-based pulp is an essential part of Stora Enso's strategy and in one step this transaction has secured the strategic raw material supply for a world class pulp mill in Uruguay that we are planning jointly with Arauco.”

Stora Enso and Arauco have established a 50/50 joint venture to combine their existing assets in Uruguay. The parties will integrate the assets acquired from Grupo ENCE into this joint venture, creating a total land base of approximately 250.000 hectares, nearly half of which is planted with hardwood and softwood.

However Stora Enso and Arauco have not taken any investment decision concerning the construction of a pulp mill in Uruguay. Ence original plan was to build a pulp processing plant in Punta Pereira, next to the River Plate.

The Spanish company retains the property of around 30,000 hectares of Eucaliptus located in the Uruguay Atlantic Region, as well as the chipping mill and wood export located in Peñarol (Montevideo), in order to secure the supply of wood to its Spanish mills, particularly to the mill factory located in Huelva.

Last May in its official release the Spanish company said that the agreement will allow ENCE to strengthen its balance sheet and to adapt it the current market situation. Additionally, it will give ENCE financial flexibility to further improve the efficiency of the group’s pulp business and to address the development of the strategy for the production of renewable energy from biomass sources in Spain.

The operation involved 130.000 hectares of land with eucalyptus