RIGA - Sweden's Bergvik Skog, a forestry company, has announced that it is purchasing two Latvian companies to become the largest private forest owner in the Baltic state.
The Dienas Bizness daily reported that after Bergvik Skog takes over Fraxinus and Ruda it will possess over 30,000 hectares of total forest property.
Bergvik Skog's chairman, Tobjorn Larson, told the paper that the transactions should be finalized on May 12.
He declined to state the size of the deals. However, experts have estimated that the possible sum of the transaction could be 40 's 50 million lats (57 's 71 million euros), the paper reported.
According to the paper, Bergvik Skog purchased a 100 percent stake in Fraximus (parent company of Myrtillus and Fragaria) from a U.S. investment fund, Phemus Corporation, and 100 percent in Ruda from four small Swedish companies.
Larson said the takeovers were part of a long-term investment plan and one of the company's priorities is sustainable forest management.
He also said that Bergvik Skog did not plan to purchase any new major assets in Latvia though small transactions are possible to improve the company's group structure.
According to Dienas Bizness, this will be the largest transaction involving forest properties in Latvia.
Previously the sale of 4,800 hectares of forest by Finland's Metsaliito to Sweden's Sodra Skog in late 2006 was considered to be the largest.
In recent years Latvia's forestry has been undergoing a boom. In 2007, the Baltic state exported 994.8 million lats worth of forestry products, a 17.6 percent increase compared with 2006.
Exports of timber and timber products reached 850.6 million lats, a 20.1 percent rise year-on-year, and comprised 85.5 percent of Latvia's total exports of forestry products.
The pace of growth has decreased significantly this year, with exports of forestry products ticking up 1.1 percent in January-February compared with the same two months in 2007.
Latvia supplied its forestry products mainly to the U.K. (198 million lats, or 20 percent of total industry exports), Sweden (169 million lats, or 17 percent) and Germany (98 million lats, or 10 percent).
