Bergs Timber AB signed a letter of intent to acquire all of Jarl Timber’s shares, a subsidiary of Norvik Industries. The transaction will be made on a debt free basis and the payment will be made in newly issued shares of Bergs Timber (SEK 2.30/share). The issue price is a premium to Monday's closing price of 16.2% and Norvik expects to have a 29% stake in Bergs Timber AB after the completion of the transaction.
Yet, the final purchase price is determined based on the working capital of the company, which will be settled by 30th of April 2016. The acquisition is subject to completion of contract negotiations, implementation of the "due diligence", necessary regulatory approvals, the approval of the Extraordinary General Meeting of Bergs Timber and other customary closing conditions.
Jarl Timber conducts sawmill operations in Broakulla, Sweden. The geographical proximity of the Bergs Timber's plants in Gransjö, Orrefors and Nybro contribute positively to the industrial logic of the transaction. Moreover, Bergs Timber states that the acquisition brings the potential for synergies in production and marketing cooperation with Norvik.
As reported earlier by GWMI, Jarl timber was supposed to increase capacity and efficiency by 20-25%.
It seems that the agreement is expected to be signed in June and Bergs Timber's Extraordinary General Meeting will take place shortly after the agreement is signed.
About
Jarl Timber, founded in 1946, is located in the region of Småland, which is at the very heart of Sweden's timber country. The sawmill processes and distributes about 110 000 m3 of sawn and planed timber. Around 85% of the production is sold for exports to Europe, North Africa, Middle East and Far East.
Bergs Timber makes sawn and processed timber products at their three Swedish sawmill plants in Mörlunda, Orrefors and Gransjö, as well as at the timber preservation company Bitus, located in Nybro. The group’s sawmills are equipped with planing mills for processing, and all plants are situated within range of 100 kilometres. Total sawmill capacity is approximately 390,000 m³ of sawn timber, of which more than half is processed. Over the financial year, sawmill production totalled 283,000 (293,000) m³. Bitus produces around 155,000 m³ of preserved timber per year. Of the Company’s timber products, more than 70 percent is exported, mainly to the UK, USA, Scandinavia and the Middle East/North Africa.
By-products from manufacture are mostly sold to the pulp and particleboard industries. Timber raw materials are obtained primarily from the areas surrounding the group’s sawmills. The group offers a full range of silvicultural services, ranging from advising forest owners, to clear felling.
