Sappi may be on prowl in Latin America
May 26, 2003
By Bloomberg
Johannesburg - Sappi, the biggest maker of glossy paper for magazines, might have made a bid for two pulp businesses, worth as much as $720 million, that were being sold by Klabin, analysts said at the weekend.
Klabin, Brazil's largest paper maker, is preparing to sell assets to reduce debt and has said the company would release its plans by the end of August. Sappi declined to comment on whether it had bid for the Klabin units.
"I think it has bid for the Riocell and Bacell pulp mills," said Thomas Souza, an analyst at Merrill Lynch in Sao Paulo.
"Riocell should be worth something in the range of $550 million to $600 million and Bacell between $100 million and $120 million."
Sappi, whose customers include Vogue and Vanity Fair, plans to increase its share of the glossy paper market, where rivals include International Paper and UPM-Kymmene.
Costs were lower in Brazil than in other major pulp-producing countries such as Canada, the US and Sweden, analysts said.
"From a strategic point of view, it would make a lot of sense because Brazil is a low-cost area for pulp production," said David Brennan, an analyst at SCMB Securities in Johannesburg.
"If they want to increase their market share, they would also have to up their pulp capacity."
Other companies that probably submitted bids on May 12 include Spain's Grupo Empresarial Ence and Canada's Tembec, Souza said. Brazilian newspapers, including Valor Economico, reported the bids last week.
Robert Hope, Sappi's strategic development director, said Latin America "is a growing area in terms of forest products and we're in that business".
Sappi closed R1.20 higher at R94 on Friday. - Bloomberg
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