Suzano’s US acquisitions: The Brazilian pulp giant’s expansion ambitions
Suzano has completed the acquisition of two industrial mills from Pactiv Evergreen in the US for US$110 million. The move adds approximately 420,000 metric tons annually of integrated paperboard to the Brazilian company’s production capacity, making it a major supplier of papers used to produce liquid packaging boards in North America.
The acquisition agreements were made in July by Pactiv Evergreen for its Arkansas and North Carolina sites. Suzano is currently the largest supplier of hardwood market pulp in North America.
Natasha Valeeva, an analyst for food supply chain and agriculture at Rabobank, tells Packaging Insights this is “a strategic move for Suzano in its efforts to diversify its product portfolio beyond pulp, reduce its exposure to the Chinese pulp market, and thereby mitigate earnings volatility and ensure greater resilience.”
“The deal might represent the first step of the pulp-making giant in building a packaging platform in the US and the next step toward internationalizing production and expanding logistics for a broader reach in packaging,” she says.
“Furthermore, although the acquired assets are integrated and benefit from the local wood supply, Suzano might explore general opportunities for adding its competitive hardwood (from Eucalyptus) to packaging verticals in North America.”
Mergers and acquisitions
Valeeva says that in terms of financial cost, a US$110 million cash deal is not significant for Suzano, and it will not constrain the company’s capacity to make further investments in other areas of pulp production.
Recently, Suzano made a bid to acquire International Paper (IP) for US$15 billion. This followed IP’s acquisition bid for DS Smith, which has since triggered a period of mergers and acquisitions throughout the industry.
“Changes to competitive landscape and consolidation drivers, which I have analyzed, are not limited to the corrugated segment,” notes Valeeva, “they are applicable to the paper packaging sector as a whole.”
“This deal fully fits into the current trend of scaling up of global M&A moves. Recent transatlantic M&A deals involving large global players trigger other large players to make significant moves in the packaging sector globally.”
“The company is likely to continue exploring new growth opportunities in packaging, including from the acquisition of assets in North America. Europe could also be a region of potential interest, in the search for diversification, integration and innovative solutions for sustainable packaging materials.”
Suzano’s expansion
Suzano will also be looking for broader investment opportunities outside of the packaging space to leverage its structural competitiveness in pulp-relevant segments, Valeeva emphasizes. In June this year, the company acquired a 15% stake in Lenzing, a global supplier of cellulosic fibers for the textile and nonwovens industry.
Fabio Almeida, executive vice president of Paper and Packaging at Suzano and CEO of Suzano Packaging US, tells us: “The state of Arkansas has a good basket of fiber, with good quality and cost, located close to our mill in Pine Bluff. We also have competitive energy costs in the region.”
“This should allow us to be competitive when producing pulp and paper in the region while delivering our customers high-quality products. We will work in the following months to improve the competitiveness of our operations, looking for opportunities to grow our product offering to our North American customers.”
