M-real Corporation (OMXH: MRLBV) is selling 7.3% of its shareholdering in Metsä Fibre Oy (formerly Metsä Botnia) to Itochu Corporation for 138 millions Euros as a part of a larger arrangement with Metsäliitto Cooperative also selling some shares to Itochu. The total value of the deal is 472 million Euros, valuing Metsä Fibre at just over 2 billion Euros.
At completion Metsäliitto Cooperative will exercise its purchase option on UPM’s (OMX: UPM1V ) 11% shareholding in Metsä Fibre. This is valued at 150 million Euros. Following transactions, which is subject to regulatory approvals, M-Real and Itochu Corporation will both have a 24.9% stake and Metsäliitto Cooperative maintains a direct majority in addition to its indirect holding via its near 40% stake in M-Real.
Metsä Fibre and Itochu enter into a commercial arrangement where Itochu will be a sales agentfor Metsä Fibre’s long fibre pulp in Asia and Metsä Fibre continues as a sales agent for Itochu’s short fibre pulp i Europe. The companies already have a long working relationship. Metsä Group’s equity ratio will improve by >4% and net gearing by some 30%.
M-Real said a part of the reasoning behind the deal was to strengthen Metsä Fibre as one of he global leaders in pulp market. Additionally the company reduces its own pulp surplus from 0.5 million annual tonnes to 0.3 million annual tonnes.
M-Real is also divesting 0.5% of its holding in Finnish energy company Pohjolan Voima Oy to Metsä Fibre for 64 million. This leaves M-Real with a 2% stake. M-Real will book a capital gain of approximately 88 million from divested Metsä Fibre shares in Q2 2012 accounts and 40 million from Pohjolan Voima sale.
In the AGM towards the end of last Month, it was decided that M-Real’s business name changes to Metsä Board Corporation to better reflect the current form of the company. Its share gained over 6% in today’s trading.
Showing posts with label M-Real. Show all posts
Showing posts with label M-Real. Show all posts
Wednesday, 11 April 2012
Friday, 9 December 2011
Warnings and closures continue @ Nordic Pulp & Paper sector
Pulp & paper companies were under pressure after M-Real (OMXH: MRLBV) issued a profit warning, in which the company said that fourth quarter result will be clearly weaker than the previous quarter. The earlier guidance assumed that Q4 results would be on par with Q3 results. The company will start statutory negotiations for working time arrangements and possible layoffs affecting up to 1200 workers. M-Real’s stock retreated 11%. Moodys joined the party shortly after that and revised outlook for global paper and forest products to negative. The rating agency says that declining demand leading to weakened pricing will not be fully offset by cost cutting measures of the companies and declining input prices.
Norske Skog’s (OSE: NSG) stock price held up better today as its corporate assembly agreed with the board of directors that the historic Norske Skog Follum mill shall be closed, removing some of the redundant newsprint capacity. The mill has two remaining machines, PM1 and PM7, after the closure of PM2 in 2008. The capacity of the two machines is 290 000 tonnes. The mill has long been considered as uncompetitive in the future market environment.
The tensions got high after the announcement amongst the workers union and the 356 employees, as forest owners association Viken Skog had an outstanding offer for the purchase of Follum rejected by Norske Skog . The initial offer was in fact completely unreasonable, given that even the resalable energy contracts from Follum are worth more than that. The appreciation of the Norwegian Krone has made the situation even more dire for companies producing in there. Norske Skog’s stock price has been up since the third quarter results raised hopes that the company will be able to weather the storm out.
After market close Swedish company Holmen (OMX: HOLM B) noted that it has finished a forest revaluation process, which will positively impact operating prodit by 3.6 billion SEK and profit after tax by 2.6 billion SEK on Q4. Press conference is scheduled for tomorrow December 9th at 10.00 CET.
Norske Skog’s (OSE: NSG) stock price held up better today as its corporate assembly agreed with the board of directors that the historic Norske Skog Follum mill shall be closed, removing some of the redundant newsprint capacity. The mill has two remaining machines, PM1 and PM7, after the closure of PM2 in 2008. The capacity of the two machines is 290 000 tonnes. The mill has long been considered as uncompetitive in the future market environment.
The tensions got high after the announcement amongst the workers union and the 356 employees, as forest owners association Viken Skog had an outstanding offer for the purchase of Follum rejected by Norske Skog . The initial offer was in fact completely unreasonable, given that even the resalable energy contracts from Follum are worth more than that. The appreciation of the Norwegian Krone has made the situation even more dire for companies producing in there. Norske Skog’s stock price has been up since the third quarter results raised hopes that the company will be able to weather the storm out.
After market close Swedish company Holmen (OMX: HOLM B) noted that it has finished a forest revaluation process, which will positively impact operating prodit by 3.6 billion SEK and profit after tax by 2.6 billion SEK on Q4. Press conference is scheduled for tomorrow December 9th at 10.00 CET.
Thursday, 11 August 2011
Companies involved in Finnish wood cartel from 1997-2004 to face lawsuits
Yle reported this morning that private forest owners who sold roundwood to UPM (OMX: UPM1V), Stora-Enso (OMX: STERV) and Metsäliitto [Metsäliitto Cooperative is the largest shareholder in M-Real (OMX: MRLBV), M-Real is not involved] are going to sue the companies for damages suffered from the cartel that was in place from 1997 to 2004. STT reported on Tuesday that as an example, the city of Jyväskylä might have lost 1.2 million Euros
Stora Enso and Metsäliitto were both given competition infringement fine by The Market Court in 2009, the total amount of which was 51 million Euro. UPM escaped a fine on the grounds of being the party that tipped authorities on the existence of the cartel. The Market Court did not prove actual price agreements between companies but concluded that companies were aiming at stable price development for round timber.
On 04.01.2011 Finnish Forest Research Institute (Metla) estimated that damages suffered by forest owners could have been over 1 billion Euro including non-direct losses and interest payments until now. A private forest machine selling entrepreneur has been urging individual sellers to join in a class action suit and Association of Finnish Local and Regional Authorities has been coordinating municipalities’ actions. Supposedly hundreds of private forest owners and a couple dozen municipalities may file suit.
The municipalities are hiring an advocate to conduct a research on the damages suffered and will decide on a lawsuit on the basis of that. Numerous parishes are also looking into the possibility of joining in. Finnish Metsähallitus (Administration of Forests,) has already made a claim of 282 million Euro, which is in preparations in district court. The Pulp & Paper sector companies involved say the claim is baseless. Lawsuit need to be filed before the end of the year.
Stora Enso and Metsäliitto were both given competition infringement fine by The Market Court in 2009, the total amount of which was 51 million Euro. UPM escaped a fine on the grounds of being the party that tipped authorities on the existence of the cartel. The Market Court did not prove actual price agreements between companies but concluded that companies were aiming at stable price development for round timber.
On 04.01.2011 Finnish Forest Research Institute (Metla) estimated that damages suffered by forest owners could have been over 1 billion Euro including non-direct losses and interest payments until now. A private forest machine selling entrepreneur has been urging individual sellers to join in a class action suit and Association of Finnish Local and Regional Authorities has been coordinating municipalities’ actions. Supposedly hundreds of private forest owners and a couple dozen municipalities may file suit.
The municipalities are hiring an advocate to conduct a research on the damages suffered and will decide on a lawsuit on the basis of that. Numerous parishes are also looking into the possibility of joining in. Finnish Metsähallitus (Administration of Forests,) has already made a claim of 282 million Euro, which is in preparations in district court. The Pulp & Paper sector companies involved say the claim is baseless. Lawsuit need to be filed before the end of the year.
Thursday, 4 August 2011
M-Real also down heavily after Q2 numbers
Another pulp & paper sectory player which has had to go through some tough times in the last few years is M-Real Corporation (OMXH: MRLAV, OMXH; MRLBV). It has so far managed the turn-around a little bit better but today’s quarterly report raised worries once again. Second quarter operating profit excluding non-recurring items dropped to 32 million Euros. A shutdown at Simpele pushed reported operating profit to -32 million.
M-Real said that short term profitability is affected by softening demand in paper products. The company expects board production profitability to remain good. The more liquid B-share fell 24% on the report.
M-Real said that short term profitability is affected by softening demand in paper products. The company expects board production profitability to remain good. The more liquid B-share fell 24% on the report.
Wednesday, 13 July 2011
UPM's Myllykoski and Rhein Papier deal approved
EU commission unconditionally approves UPM Kymmene's (OMX: UPM1V) Myllykoski and Rhein Papier GmbH deal discussed in detail in 21.12.2010 blog item. Competitors Stora Enso (OMX: STERV) Holmen (OMX: HOLM B) Svenska Cellulosa Aktiebolaget (SCA) (OMX: SCA B), M-Real (OMXH: MRLAV, OMXH: MRLBV) and Norske Skog (OSE: NSG) are also up strongly on the news.
EU commission conducted an in-depth investigation and concluded that the combined entity will face enough competition so as to that consumers are not hurt. Competitors also have significant spare capacity left. Nevertheless some of the excess capacity in the field may now be cut by UPM. Analysts had been suggesting to buy European pulp & paper sector companies ahead of the approval as it was speculated that a ruling would be positive.
Combined Myllykoski and Rhein Papier have even paper mills with annual capacity of around 2.8 million tonnes. Myllykoski is a family business with long traditions. The owners have been rueing post initial announcement that situation had to come to this and now the most likely cuts should be from its assets. Rhein Papier has a couple of prime assets. UPM has now cleared all regulatory hurdles and expects final closing of the 900 million Euro per enterprise value deal within a month. UPM Kymmene's release is available here.
EU commission conducted an in-depth investigation and concluded that the combined entity will face enough competition so as to that consumers are not hurt. Competitors also have significant spare capacity left. Nevertheless some of the excess capacity in the field may now be cut by UPM. Analysts had been suggesting to buy European pulp & paper sector companies ahead of the approval as it was speculated that a ruling would be positive.
Combined Myllykoski and Rhein Papier have even paper mills with annual capacity of around 2.8 million tonnes. Myllykoski is a family business with long traditions. The owners have been rueing post initial announcement that situation had to come to this and now the most likely cuts should be from its assets. Rhein Papier has a couple of prime assets. UPM has now cleared all regulatory hurdles and expects final closing of the 900 million Euro per enterprise value deal within a month. UPM Kymmene's release is available here.
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