Suzano to acquire Lenzing stake for €230M: How could other mergers be impacted? 

14 Jun 2024 --- Suzano is acquiring a 15% stake in Austrian wood-based materials producer Lenzing for €230 million (US$248 million). The announcement raises further questions over Suzano’s rumored bid to buy International Paper (IP), which, in turn, is in the process of acquiring DS Smith.

Lenzing is a leading supplier of regenerated cellulose fibers for the textile and nonwoven industries. The company’s main shareholder, B&C Group, announced the long-term partnership on Wednesday.  

Suzano is the world’s largest pulp producer based in São Paolo and recently achieved annual sales of more than €7 billion (US$7.5 billion). 

Stephan Sielaff, CEO of the Lenzing Group, says: “Lenzing and Suzano are two companies that have come to know and appreciate each other in recent years as relevant players on the international pulp market.” 

“Based on the core competencies in the area of pulp production and operational excellence, Suzano can make a valuable contribution to the successful implementation of our strategy. For us, the constellation of the two strong core shareholders, B&C Group and Suzano, is definitely a win.”

Lenzing’s EBITDA more than doubled year-on-year to €71.4 million in Q1 2024.“Uncertainty on many fronts” 
Packaging industry expert and consultant Neil Farmer tells Packaging Insights the move is an interesting development, given IP’s acquisition of DS Smith and recent rumors that Suzano is in talks to purchase IP. 

However, a Suzano merger with IP would likely mean an end to the DS Smith merger.  

“Suzano is an ambitious company,” says Farmer. “I suspect taking a 15% stake in Lenzing (which has interests in Brazil) will not necessarily impact any potential deal with IP, reported to be worth US$7.4 billion.”

“However, there are questions about how much Suzano can raise its initial US$42-a share offer for IP without affecting the company’s credit rating. And then there is the question of DS Smith.” 

It was reported on June 3 that the top boss of IP traveled to London to reaffirm his company’s commitment to the DS Smith merger. It was believed he was downplaying the offer from Suzano as it threatened to derail the US$7.4 billion DS Smith deal, Farmer explains. 

“There is uncertainty on many fronts. Does the Lenzing deal scupper the IP deal, or is it a strategic move by Suzano to further grow the business with an established company that has good technical knowledge and product range?”

“The next move will be very interesting, to say the least.”

By Louis Gore-Langton