Bergs to sell Swedish sawmills to Vida23 June 2020
Bergs Timber has signed an agreement to sell its Bergs’ Swedish sawmill business to Vida for SEK400m.
The transaction encompasses the sawmills in Orrefors, Vimmerby and Mörlunda, and is scheduled to be concluded on September 1. All personnel employed at each of these sawmills and in the purchasing organisation for raw materials will be offered employment at Vida, which is also acquiring the assets at the already discontinued operation at Gransjö.
The sale is part of Bergs’s 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. The total purchase consideration for the operations, including the working capital involved, is estimated at approximately SEK400m, of which SEK303m pertains to fixed assets. In conjunction with the transaction, an additional SEK150m in working capital is expected to be freed up.
As a result of the sale, Bergs will recognise a capital gain before tax of approximately SEK100m. The Swedish sawmill business, including the recently discontinued operations in Gransjö, represent annual sales of approximately SEK1.1bn and over the last five-year period generated an EBITDA-margin between 3-11%.
The remaining operations will have net sales of approximately SEK2bn, with a margin that over time has been higher and more stable than that reported by the Swedish sawmill business. After the sale, Bergs will consist of wood processing operations in wood preservatives, planing, buildings, windows, doors, garden products and pellets.
In addition, Bergs conducts sawmill business in Latvia and Estonia with annual production of approximately 350,000m3, 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,” said Peter Nilsson, President and CEO of Bergs.
“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.”
The sale is conditional upon Vida obtaining approval from the relevant competition authorities.