SCA acquires hygiene companies in growth markets for SEK 1 billion

  • Regulatory press release

SCA acquires hygiene companies in growth markets for SEK 1 billion SCA's Board of Directors has approved a number of acquisitions within the hygiene products area totaling about SEK 1 billion. All the projects are in line with the previously announced growth strategy for the Group's hygiene segment. Brazil is new SCA market In Brazil, SCA is participating in the new issue of shares in the Melhoramentos Papeis Ltda (MP) tissue company, whereby SCA is acquiring a 50% interest in the company. Currently, MP has a capacity of about 60,000 tons of tissue and annual sales amount to approximately SEK 900 million. The market share is about 10%. Measures to increase capacity on existing machines and investment in converting equipment will be implemented to increase the capacity to approximately 115,000 tons. With MP as a base, further opportunities are created to introduce incontinence and feminine hygiene products on the Brazilian market. The transaction is expected to be completed by the end of 1998. Strengthened position on the Andean market In Colombia, where in 1997 SCA acquired 20% of the shares in the Productos Familia S.A. tissue company, SCA is now successively increasing its holding to 50%. The company's sales have developed very favorably during the past year. After SCA acquired an interest, the company purchased Tecnopapel, one of the two tissue companies in Ecuador. Previously, SCA was already engaged in a 50/50 joint venture with Productos Familia in the fluff segment. Expanded involvement in Asia In the Philippines, all shares in the Holland Pacific Paper Inc. (HPPI) tissue company were acquired. Capacity is currently 22,000 tons of tissue and 8,000 tons of specialty papers. The specialty paper machine can be converted to tissue production. Sales amount to approximately SEK 75 million annually and the market share is about 22%. SCA is also involved in joint ventures in Japan, Taiwan and Australia. Financing through cash flow All the acquisitions well meet SCA's return requirements in the various regions (about 20%). It is expected that financing will be carried out within the framework of SCA's 1998 cash flow from operations. Stockholm, 27 August 1998 SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ) Corporate Communications For further information please contact: Sverker Martin-Löf, President and CEO. Tel: +46 8-788 51 51 or Sten Lindholm, Senior Vice President, Corporate Communications. Tel: +46-8-788 51 62.