Ahlstrom to form specialty paper joint venture in Brazil

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Ahlstrom will be a 60% stakeholder and invest about EUR 80 million for its stake in the deal. VCP will hold the remaining 40% stake.

The deal involves VCP's assets, including a paper machine, an offline coater and extensive finishing equipment at the Jacarei mill, close to São Paulo. The annual production capacity of the paper machine is about 110,000 tons per year. The operation has annual net sales of approximately EUR 100 million.

Ahsltrom said the JV will be part of its Specialty Papers business serving mainly the labeling applications and certain flexible packaging markets. Additionally, it will continue to produce coated and uncoated paper grades for other end uses.

The Jacarei facility is an integrated pulp and paper mill and one of the most modern and competitive eucalyptus pulp producers in the world with a production capacity of 1.1 million tons per year, Ahlstrom said.

The companies have also negotiated a long-term agreement whereby VCP will supply eucalyptus pulp, utilities and other services to Ahlstrom's operations at the Jacarei mill at competitive prices.

"The joint venture with the state of the art assets allows us to enter the rapidly growing labeling and packaging markets in Latin America. After the closing of the transaction, Latin American markets will generate approximately 10% of Ahlstrom's net sales," said Jukka Moisio, president and CEO of Ahlstrom.

The deal is expected to close during the third quarter of 2007 and is subject to antitrust clearances.

Under the terms of the deal, Ahlstrom has an option to purchase the remaining share in the joint venture held by VCP after two years time.

SOURCE: Ahlstrom