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Aditya Birla buys Swedish pulp firm for $340 mn

Two days after acquiring Kanoria Group's chemicals business, Aditya Birla's two overseas companies - Thai Rayon Public Co Ltd and Indo Bharat Rayon acquire Swedish specialty pulp company Domsjo Fabriker.

Mail Today Bureau   Mumbai     Last Updated: April 19, 2011  | 09:20 IST

The Aditya Birla Group is on an acquisition spree. Two days after acquiring Kanoria Group 's chemicals business for Rs 830 crore the Aditya Birla Group on Monday announced the acquisition of Swedish specialty pulp company Domsjo Fabriker for $340 million (Rs 1,505 crore).

The company was acquired by Aditya Birla Group's two overseas companies - Thai Rayon Public Co Ltd (Thailand) and Indo Bharat Rayon (Indonesia) - from a consortium of six Swedish investors. This acquisition is part of Aditya Birla Group's strategy to attain control over raw materials and the company said it would continue to look for such assets globally. The acquisition is funded through debt and equity in the ratio of 70:30.

 Expanding reach

  • Swedish specialty pulp firm Domsjo Fabriker bought by Aditya Birla Group's two overseas cos from a consortium of six Swedish investors
  • This is part of the Group's strategy to attain control over raw materials
  • Company to continue to look for such assets globally
  • The acquisition has been funded through debt and equity in the ratio of 70:30
  • Aditya Birla Group has retained the management team of Domsjo and nearly 400 employees. Also, Birla added that there are no plans to change the name of this company
  • Domsjo's capacity to be expanded to 2,55,000 tonnes per annum from the current 2,10,000 by 2012
  • A total investment of $415 million to be made by the Aditya Birla Group
  • Specialty pulp produced by Domsjo finds use in the textile segment
  • About 25% of the production is used in applications like binding agents for medical products and in casings for the food industry

"This acquisition of Domsjo Fabriker, a world-class company with the most environmentfriendly technology, marks a significant milestone of our pulp and fibre business. Its cuttingedge technology and production process, coupled with a state-of-the-art bio refinery, adds significant value to our pulp and fibre operations," said Kumar Mangalam Birla, chairman, Aditya Birla Group, while making this announcement.

"Domsjo's high quality pulp will enable us to enhance the supply of top quality premium viscose staple fibre (VSF) to our customers. The pulp and fibre business is a core business of our group and this acquisition is a strategic fit," Birla added. Aditya Birla Group has retained the management team of Domsjo and nearly 400 employees. Birla added that there are no plans to change the company's name. "This acquisition is in line with our strategy of having a substanciative part of our specialty pulp for our consumption through our captive source. With Domsjo we are closer to this goal," said K.K. Maheshwari, business head (pulp and fibre), Aditya Birla Group.

Domsjo has an extensive investment programme for the purpose of capacity expansion from its current 2,10,000 tonnes to 2,55,000 tonnes per annum by 2012. This expansion is being implemented with an investment of $75 million (Rs 332 crore). Including this, the total investment in this acquisition works out to be $415 million (Rs 1,837 crore).

Specialty pulp produced by Domsjo finds primary use in the textile segment, which includes VSF and viscose filament yarn. Around 25 per cent of the production is used in premium applications, such as binding agents for medical products, particularly pharmaceutical tablets, and in casings for the food industry. This acquisition will further help the Aditya Birla Group to consolidate it global leadership position.

Courtesy: Mail Today 

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