TAKEOVERS: Latvijas Finieris Buys a Bankrupt Estonian Producer
01 Jul 2011 • by Natalie Aster
Latvian plywood manufacturer Latvijas Finieris has set out to revive the Estonian plywood industry. It has established an Estonian subsidiary Kohila Vineer, which has taken over the remaining assets of the bankrupt Kohila birch processing plant. The plant closed its doors in 2008, and until now its assets were owned by SEB Liising, the leasing arm of Swedish SEB banking group.
"The goal of the acquisition is to resume the activities of the factory at a new level," says Jolanta Medne, spokesperson for Latvijas Finieris, in the company's statement. "The factory will be subject to reconstruction in order to meet the latest technology standards. Total investments in 3 years will reach EUR 17m."
Mutually beneficial
Latvijas Finieris stresses that both sides benefit from the deal. For one, the plant will create about 70 jobs in the next three years, helping alleviate Kohila's unemployment problem. The plant will also benefit the Estonian forest owners – and Estonia's export structure. Instead of simply selling timber, the plant will allow converting it to plywood, which, as Medne notes, "is a very competitive product in the world market."
As to Latvijas Finieris, the new plant will be its first foray in Estonia. It already owns five plants in Latvia and one in Lithuania. It is no wonder that the company is buying a birch processing plant: birch plywood is a specialty of Latvijas Finieris, and it claims to be the largest birch plywood manufacturer in the world.
The takeover marks quite a change from previous years, when Latvijas Finieris, faced with a shrinking market, was forced to lay off workers in Latvia and cut down its operations. Previously, Latvijas Finieris itself was the subject of a failed takeover attempt. Russian plywood giant Sveza tried purchasing its shares through a public offer to the company's shareholders. The attempt was unsuccessful, and Sveza seems to have shelved its plans.
The above news abstract has been taken from a bi-weekly newsletter to professionals doing business in Eastern Europe "news2biz – Manufacturing".
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