Versowood, already the largest private producer of sawn timber in Finland, said the move – taking effect on January 1 – would create a combined sawmilling turnover of more than €330m, projected to increase to €350m in 2014.

The Hankasalmi mill has a turnover of about €60m, while Versowood’s turnover is in excess of €275m. Vapo will use the sale proceeds to pay off debt.

Hankasalmi has a current output of 260,000m3 (capacity – 300,000m3) with a production mix of 60% pine and 40% spruce, while Versowood’s annual production, comprising three sawmills, is 900,000m3. Versowood’s goal is to produce 1.3 million m3 of sawn timber in 2014.

The increased volumes see Versowood stay in fourth place in the ranks of Finnish sawmilling size, but its sawn timber output is now nearly as big as Metsä Wood (1.48 million m3: The Sawmill Database), but someway behind industry giants UPM and Stora Enso.

Versowood said the acquisition would make the company stronger, particularly in its planing and timber treatment business, as well as creating opportunities to further expand group operations.

It also expands Versowood’s wood procurement area to Central Finland. Versowood CEO Ville Kopra said the wood processing sector needed re-organisation as profitability had been poor for a long time.

“This transaction brings with it synergies that create better opportunities for the new business unit,” said Mr Kopra.

“After a few bad years the situation is now slowly improving, but it is still a long way to the so-called ‘super-cycle’”.

After the transaction Vapo Timber will have two sawmills in Lieksa and Nurmes, which will be developed as independent units.