Pulp and paper manufacturer Suzano announced Thursday the purchase of a package of forestry assets with a total area of 206,000 hectares, in four Brazilian states, for $667 million. Those assets originally belonged to Fibria, a merger between Aracruz and Votorantim, which was incorporated by Suzano in 2019.
The operation is strategic and ensures the world’s largest producer of eucalyptus pulp access to wood at lower costs, in addition to ownership of land in São Paulo, Mato Grosso do Sul, Bahia and Espírito Santo states, that could be of interest of other pulp producers or investors — and will serve the company’s own projects in the long term.
Almost all of the operations purchased had already been exploited since 2003, through forest partnership contracts signed by the former Fibria. That year, pressured by high indebtedness, Fibria sold 210,000 hectares of land and forests to Parkia Participações and secured wood purchasing contracts, inherited by Suzano.
In the evaluation of analyst Daniel Sasson, with Itaú BBA, the financial statement position of Suzano is comfortable and the company’s debt cost is lower than Fibria’s 7.5%, which was paying around $50 million per year to purchase wood.
In addition, Mr. Sasson says, Suzano has interest in the regions where these areas are and there is a defensive aspect to the operation: “206,000 hectares are enough for a competitor to install a new pulp mill in the country with a capacity of more than 2 million tonnes per year,” he wrote.
In a statement, Suzano said the operation aims to expand operational efficiency, “as well as improve the use and cost of forest base in strategic regions to its operations in the long term.”
“Suzano currently has a very competitive cost of debt and cash availability to acquire these assets and thus ensure greater operational efficiency and less dependence on third-party wood in the long term,” said the CEO Walter Schalka, in a statement.
The forestry assets were sold to Suzano by the investment fund Investimentos Florestais (FIP) and Arapar Participações. The payment will be made in two installments, the first paid in the closing of the operation and the second 12 months after the closing. The deal still depends on approval by the Cade, the antitrust regulator.
Source: Valor International