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Canfor subsidiary VIDA to acquire Bergs Timber Swedish sawmills

Sweden-headed wood processing major Bergs Timber AB (Bergs) has announced that it has signed an agreement with compatriot sawmilling major VIDA AB (VIDA), a 70 percent-owned subsidiary of Canada-headed forest industry major Canfor Corporation, on the sale of Bergs’s Swedish sawmill business.
“We are excited that VIDA’s strong performance and balance sheet has enabled them to grow their operating footprint in Sweden,” said Don Kayne, President, and CEO of Canfor.

Bergs Timber AB (Bergs) has signed an agreement with compatriot sawmilling major VIDA AB (VIDA), a 70 percent-owned subsidiary of Canada-headed forest industry major Canfor Corporation, on the sale of its Swedish sawmill business as part of its strategy to focus on developing the Group’s operations towards a segment with more processed products including garden wood products and pellets.

The transaction encompasses Bergs operational sawmills in Orrefors, Vimmerby, and Mörlunda, and the assets of discontinued operation at Gransjö and is scheduled to be concluded on 1 September 1, 2020, subject to due diligence, completion of certain transaction documents and other customary closing conditions, including any required regulatory approvals.

The total purchase consideration for the operations, including the working capital involved, is estimated at approximately SEK 400 million (≈ EUR 38 million), of which SEK 303 million (≈EUR 28.8 million) pertains to fixed assets. All personnel employed at each of these sawmills and in the purchasing organisation for raw materials will be offered employment at VIDA.

Increased sawmill capacity for Canfor

According to Canfor, the three mills will add approximately 215 million board feet (≈ 500 000 m3) to VIDA’s annual sawmill capacity. With the additional investment, VIDA anticipates the production capacity of the mills can be increased to 300 million board feet ≈ 700 000 m3).

After taking into account this additional production capacity, Sweden represents 22 percent of Canfor’s globally diversified operating platforms – 47 percent in Canada (British Columbia and Alberta) and 31 percent in the southern United States (US).

Following downtime related to the impacts of the coronavirus (COVID-19) pandemic, VIDA is operating at full capacity and Canfor continues to employ variable operating schedules in North America with sawmills in the US operating at almost full capacity and Canadian sawmills operating at approximately 90 percent effective June 18, 2020.

Bergs to focus on wood processing and pellets

For Bergs, the planned divestment to VIDA is part of its stated strategy of developing the Group’s operations towards a segment with more processed products. With the divestment of its Swedish sawmill business, a significant change will take place in the Group structure, while entirely new financial conditions are being created for this development.

After the sale, Bergs will consist of wood processing operations in wood preservatives, planing, buildings, windows, doors, garden products, and wood pellets. In addition, Bergs conducts sawmill business in Latvia and Estonia with an annual production of approximately 350 000 m3 sawn wood, as well as harbour and distribution operations in the UK.

“The deal with VIDA means that our Swedish sawmill business and its employees are in good hands. At the same time, Bergs will have the conditions to develop in a segment with more processed products in addition to the significant operations of this type we already have in Latvia and Sweden. I envision an exciting and challenging process for transforming Bergs into a company with different, more demanding financial targets than what we currently have”, said Peter Nilsson, President, and CEO of Bergs (photo courtesy Bergs).

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