Sunday , February 28 2021

To the south of the billionth business: it was a unique opportunity

"This was a unique opportunity that was discovered," says Olof Hansson, head of the Södra Skog business sector, for three billion acquisitions in Latvia.

Therefore, Södra buys the entire Bergvik Forest farm in Latvia. It is about 111 100 hectares of land, of which 80,300 hectares is forest land. They will be added to 15 000 hectares of forest land in Latvia, already owned by Södra. Thus, Södra owns five percent of the private forest land in Latvia.

– There is no ordinary Latvian forest that we buy. It's very ambitious for these properties, where you have been cleared up and planted over the last ten years, "says Olof Hansson.

Lars George Hedlund, the head of Bergvik Forest in Latvia, says that one million day-care workers are going to take care. For over ten years, 500 people have been working to create good forestry.

"We are glad that the work we have done has been appreciated by Södra and others who took part in this process. He says that it is a work victory.

Södra pays EUR 324 million, equivalent to 3.3 billion Swedish kronor, to be held in Latvia.

Almost a billion capital gains

Bergvik Skog party owner Stora Enso announces that the transaction's return on capital is SEK 487 million. This means that the total capital gain for Södra will be almost SEK 1 billion.

According to Olof Hansson, if you calculate the value of other land and agricultural land, the forest price will be about SEK 35,000 per hectare, or about SEK 275 per forest cubic meter.

– Then you can make an assessment yourself if you think it's a good or a bad business, but there are significant differences in the prices we see in Götaland. We think this is a good deal or we will not do it.

Forested land in Bonn should be well suited to southern Sweden, and with continued extensive forest management, growth and harvesting opportunities in the future will continue to increase significantly.

"We see this as an essential part of the supply perspectives. Latvia is and will continue to be an important source of import for us. Now, we provide part of the need for us," says Olof Hansson.

May be shipped to Sweden

Formerly Bergvik Skog has sold the wood as the root of the highest bidder. In the future, the timber will be sold to the Latvian industry and, if necessary, the pulp will be delivered to Sweden Södra.

However, the imports from Södra's forests will not have any impact on Swedish cellulose prices. Olof Hansson says that 95,000 hectares in Latvia are slightly compared to 2.5 million hectares of forest, which is a member of Södra.

"It is small and Sweden will not affect everything. It will rather enable our industry to become lucrative and be able to reap the profits that the industry will bring to our owners," he says.

Stricter security situation in Europe, where Russia's neighboring Russia has shown great-power ambitions, is nothing that destroys Södra.

"We see Latvia as a very stable country, as EU members and also NATO members. We have been active in Latvia for many years and we do not see much danger to Latvia from this aspect," says Olof Hansson.

Facts Bergvikas Forest in Latvia

Area: 110 000 hectares

Productive forest land: 80,300 hectares.

Wood floor: 10, 6 million m3sk.

Cutting 2017: 239 415 m3fub.

Source: Annual Report of Södra and Bergvik Forest

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