Suzano Agrees US$110 Million Purchase of Two US Industrial Facilities from Pactiv Evergreen

Rhea-AI Summary

Suzano, the largest pulp producer globally, has announced the acquisition of two industrial facilities from Pactiv Evergreen in the US for $110 million. The facilities are located in Pine Bluff, Arkansas, and Waynesville, North Carolina, and specialize in manufacturing liquid packaging board and cupstock. This move marks Suzano's entry into the North American consumer and food service packaging sectors. The acquisition will add approximately 420,000 metric tonnes annually to Suzano's production capacity and includes a long-term supply agreement with Pactiv Evergreen. The transaction is expected to receive regulatory approval later this year. This strategic acquisition aims to enhance Suzano’s operational competitiveness and profitability in the region.

Positive

• Suzano's acquisition of US industrial facilities valued at $110 million marks its entry into the North American consumer and food service packaging segments.
• The acquired assets are expected to add 420,000 metric tonnes annually to Suzano's production capacity.
• A long-term supply deal with Pactiv Evergreen will provide continuous input for Suzano's converting business.
• The acquisition aligns with Suzano's competitive strategy and leverages operational efficiencies from Pactiv Evergreen.

Negative

• None.

Financial Analyst

In terms of financial implications, Suzano’s acquisition of these two mills represents a strategic expansion into North America. The US$110 million purchase price is relatively modest when considering Suzano’s scale and existing market position. By enhancing their production capacity by 420,000 metric tonnes annually, Suzano significantly bolsters their presence in the consumer and food service packaging segments. This move diversifies their revenue streams, reducing dependence on purely pulp production.

The long-term supply agreement with Pactiv Evergreen ensures a stable demand for Suzano’s liquid packaging board, which could translate into predictable revenue flows. This acquisition is unlikely to stress Suzano’s financial leverage or debt levels, making it a relatively low-risk investment with the potential for high returns, particularly given the cost advantages mentioned (high wood availability and low energy costs).

Retail investors should note that while the immediate financial impact might be limited, the long-term benefits could be substantial. The acquisition fits well with Suzano’s growth strategy, possibly leading to favorable stock performance over time.

Market Research Analyst

From a market perspective, Suzano’s entry into the North American consumer and food service packaging industry is noteworthy. The packaging market in North America is mature and highly competitive, but Suzano’s experience in Latin America positions them well. The assets’ competitive positioning on the North American cost curve further enhances their chances of success.

Moreover, the strategic locations of the mills in Arkansas and North Carolina grant Suzano logistical advantages, such as proximity to key transport infrastructures (railways, ports and highways). This operational efficiency could help lower overall production and distribution costs, enhancing profitability. The emphasis on leveraging Pactiv Evergreen’s operational expertise suggests a focus on maintaining high-quality production standards and customer satisfaction.

Retail investors should consider the broader market trends here: the demand for sustainable packaging solutions is growing and Suzano’s eco-friendly production processes could attract environmentally conscious consumers and companies. While immediate returns might be modest, the long-term market potential is significant.

SÃO PAULO--(BUSINESS WIRE)-- Suzano, the world's largest pulp producer, has announced the acquisition of industrial assets from Pactiv Evergreen in the United States. This will expand the company’s operations in North America and marks its entrance into the consumer and food service packaging segments in the region. The transaction is valued at US$110 million and includes two mills in Pine Bluff, Arkansas, and Waynesville, North Carolina, that manufacture liquid packaging board and cupstock.

Subject to final regulatory approval expected later this year, these assets will add approximately 420,000 metric tonnes annually of integrated paperboard to Suzano’s production capacity. Alongside the acquisition, Suzano has signed a long-term supply deal with Pactiv Evergreen to provide liquid packaging board for its converting business.

Suzano is currently the largest supplier of hardwood market pulp in North America, with US offices in Fort Lauderdale, Florida, and a research and innovation campus close to Vancouver, Canada. Already a major producer of materials for food and beverage packaging in Latin America, Suzano will work alongside Pactiv Evergreen’s team, leveraging its operational knowledge and experience in the paperboard business to enhance the structural competitiveness and profitability of the acquired assets, which are already comparatively well-positioned on the cost curve of the North American packaging industry.

Fabio Almeida, Executive Vice President of Paper and Packaging at Suzano, said:

“This acquisition is in line with our strategy. We are entering the North American market as a competitive producer of paperboard, taking on quality assets that are strategically well-located from an operational and logistical perspective, and opening new opportunities for growth.”

“As a business with 100 years of history behind us, we see this deal as an investment into our future and we look forward to building a long-lasting and positive relationship with the teams at Pine Bluff and Waynesville, as well as the local communities around both facilities.”

The acquired assets benefit from high availability of wood in the region, low energy costs, and good access to railways, ports, and highways.

The completion of the transaction is subject to verification of customary conditions, including the approval by a foreign antitrust authority. Once approved, the asset acquisition will occur upon closing, with the price subject to typical economic and operational adjustments for this type of transaction. The agreed-upon value does not materially impact Suzano’s financial leverage or debt levels.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240712901944/en/

Hawthorn Advisors

suzano@hawthornadvisors.com

Source: Suzano

FAQ

What is the value of Suzano's recent acquisition in the US?

Suzano's acquisition of two industrial facilities from Pactiv Evergreen is valued at $110 million.

Which facilities did Suzano acquire from Pactiv Evergreen?

Suzano acquired two mills located in Pine Bluff, Arkansas, and Waynesville, North Carolina.

What products are manufactured at the acquired facilities?

The facilities specialize in manufacturing liquid packaging board and cupstock.

How will the acquisition impact Suzano's production capacity?

The acquisition will add approximately 420,000 metric tonnes annually to Suzano's production capacity.

What strategic advantage does the acquisition provide Suzano?

The acquisition allows Suzano to enter the North American consumer and food service packaging sectors, enhancing its competitiveness and operational efficiency.

What is the stock symbol for Suzano?

The stock symbol for Suzano is SUZ.