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Mercer International to acquire HIT Holz

Mercer International to acquire HIT Holz
Mercer International Inc. (Mercer) has entered into an agreement to acquire all of the outstanding shares of HIT Holzindustrie Torgau GmbH & Co. KG (photo courtesy HIT Holz).

US-headed forest products company Mercer International Inc. (Mercer), has announced that it has entered into an agreement with Deutsche Bank and Orchard Global Asset Management to acquire all of the outstanding shares of German wood products company HIT Holzindustrie Torgau GmbH & Co. KG (HIT Holz).

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Mercer International Inc. (Mercer) is a global forest products company with operations in Germany, the United States (US), and Canada with a consolidated annual production capacity of 2.3 million tonnes of pulp, 550 million board feet of lumber, and 140 000 m3 of cross-laminated timber (CLT).

According to a statement, Mercer has entered into an agreement to acquire all of the outstanding shares of the parent company of HIT Holz for consideration of EUR 270 million, inclusive of forecasted net working capital of approximately EUR 43 million significantly expanding its solid wood operations in Europe.

This acquisition significantly increases our solid wood operations in Germany. It will allow us to capitalize on synergies with our German operations, including complementing our Friesau sawmill. Additionally, the acquisition will allow us to diversify our product mix with the introduction of pallets and biofuels, said Juan Carlos Bueno, CEO of Mercer.

Operating a timber processing and value-add pallet production facility in Torgau, and a wood processing facility in Dahlen, HIT Holz is a modern, high-performance, fully integrated wood processing company and its production capabilities include wood pallets, lumber, and biomass fuels in the form of briquettes and pellets, garden products, and biopower.

This is a highly strategic transaction for us that leverages our core competencies and is in line with our long-term growth strategies. The Transaction creates a platform for immediate cash flow generation and earnings accretion. It is an important step in our long-term value-add strategy of growth in timber processing, Juan Carlos Bueno said.

With a workforce of around 700, the company is the world’s largest producer of EPAL pallets and Europe’s largest single-site pallet producer with an annual capacity of up to 17 million pallets.

We welcome this logical next step, which after the successful transformation of HIT Holz under the previous owners now also ensures long-term stability and further growth for our company. As part of a strong group, we can achieve our goals even faster and better and thus further strengthen HIT Holz as a reliable partner and supplier for our customers, said Christian Pospiech, Managing Director of HIT Holz.

HIT Holz operates five biomass power plants with a total power capacity of 15 MWe, and produces around 150 000 tonnes of ENplus certified pellets and 100 000 tonnes of ENplus certified briquettes annually.

Our strong position as one of the largest producers in the areas of pallets and bio-fuels serves to diversify Mercer’s product portfolio. With their business models of using the raw material wood as completely as possible, both companies are pursuing identical strategies in different product areas, which now complement each other in a meaningful way, Christian Pospiech said.

The transaction is subject to customary closing conditions, including receipt of requisite regulatory anti-trust approvals, and is expected to close in the third or early fourth quarter of 2022.

Sangra Moller LLP acted as legal advisor for Mercer.

The HIT Facility has solid operating platforms in place, which can be further enhanced through improved efficiencies and capital improvements. We are delighted to welcome the employees of HIT to the Mercer team and, consistent with all our operations, we look forward to integrating the HIT operations within our core values of health and safety, sustainability, integrity, innovation, performance excellence as well as diversity, equity, and inclusion, ended Juan Carlos Bueno.

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