Bergs Timber to acquire Norvik’s Baltics and UK timber operations25 January 2018
Bergs Timber has revealed plans to acquire Norvik Timber Industries’ (NTI) operations in the Baltics and the UK.
Bergs, which has signed a letter of intent regarding the acquisition, would pay for the businesses with 170 million newly issued shares in Bergs as well as a SKr270m cash payment. NTI currently owns 29.52% of outstanding shares and votes in Bergs Timber – a holding which will increase to 64.68% after the deal.
But NTI says it intends to sell parts of its shareholding in connection with the completion of the acquisition with the long-term intention to reduce its holding in Bergs to below 50%.
“With the planned transaction, our product offering is increased significantly,” said Peter Nilsson, CEO of Bergs Timber.
“We will cooperate in different ways in the new planned group to further improve the profitability and the service to the market. At the same time, the business will continue to operate with a strong decentralised responsibility under existing brands.”
“Since the sale of Broakulla to Bergs Timber we have been a large shareholder in the company,” said Jon Helgi Gudmundsson, chairman of the board of Norvik hf.
“During this time we have experienced the strength and ambitions of the company and the company’s executive management. We are confident that this transaction is the right way to further develop our companies, not least due to our and Bergs Timber’s management’s shared view of the importance of decentralised responsibility and the use of current existing brands.”
Norvik companies to be acquired encompass production of sawn timber, wood processing, as well as port and distribution operations. Employees in these operations total 800 with sales of SKr1.61bn in the period September 2016 – August 2017.
Businesses are sawmiller Vika Wood, with one large plant in Latvia and two smaller operations in in Estonia; the Byko-Lat wood processing business in Latvia; the port business (Norvik Shipping) in east London; and Continental Wood Products, which imports and sells sawn timber products and processed products in the English market.
Through the acquisition, Bergs Timber’s product processing will increase significantly. Bergs Timber is currently active exclusively within a limited region in eastern Götaland, Sweden and is as such fully exposed to the corresponding local market for raw materials.
Through the acquisition of the target companies, Bergs will establish itself in new geographical markets in the eurozone with other and lower labour costs as well as with increased opportunities for cost effective procurement of raw materials, particularly with respect to the production of processed products.
The transaction may be completed in Q2.