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Svenska Cellulosa Aktiebolaget SCA

Svenska Cellulosa Aktiebolaget SCA


Box 7827
Stockholm, SE-103 97
Sweden
Telephone: (+46-8) 788 51 00
Fax: (+46-8) 660 74 30
Web site: http://www.sca.com

Public Company
Incorporated: 1929
Employees: 50,000
Sales: SEK 101.44 billion ($14.84 billion) (2006)
Stock Exchanges: Stockholm London
Ticker Symbol: SCA
NAIC: 113110 Timber Tract Operations; 321113 Sawmills; 321999 All Other Miscellaneous Wood Product Manufacturing; 322110 Pulp Mills; 322121 Paper (Except Newsprint) Mills; 322122 Newsprint Mills; 322130 Paperboard Mills; 322213 Setup Paperboard Box Manufacturing; 322211 Corrugated and Solid Fiber Box Manufacturing; 322215 Nonfolding Sanitary Food Container Manufacturing; 322212 Folding Paperboard Box Manufacturing; 322291 Sanitary Paper Product Manufacturing

Svenska Cellulosa Aktiebolaget SCA is one of Europe's leading forestry companies, specializing in absorbent hygiene products, baby and adult diapers, tissue products, corrugated packaging and containerboard, and publication papers. The company owns 2.6 million hectares (6.4 million acres) of productive forestlands, conducts sawmill operations, and maintains marketing operations in some 90 countries. SCA's production facilities are located in 20 countries, while two-thirds of its revenues are generated in Europe, around 15 percent in North America, and approximately 8 percent from the Asia-Pacific region.

Founded in 1929 by famed Swedish financier Ivar Kreuger, SCA initially served as a marketing organization for pulp producers in northern Sweden. After transforming itself from a holding company into an integrated forestry concern in 1954, SCA gradually expanded into the areas of newsprint and linerboard over the next two decades. In 1975 the company entered the consumer products field with the purchase of Mölnlycke AB, a manufacturer of fiber-based disposable hygiene products. This marked the start of SCA's increasing concentration on value-added products based on wood and its decreasing activity in traditional forestry products, such as pulp and low-grade paper. This development coincided in the 1980s and 1990s with SCA shifting some of its production from its Swedish homeland to the European mainland through a series of corporate acquisitions. In the 1990s SCA was also a major player in the trend toward worldwide forestry industry consolidation. This trend continued in the early 21st century, when SCA made significant inroads into the North American and Asia-Pacific markets.

FORMATION TO MARKET PULP

The roots of the establishment of SCA lie in the economic problems that hit the Swedish forestry industry in the 1920s. Forestry products, such as timber, pulp, and paper, were the country's largest export items, but their competitive position in the European market was damaged during the 1920s by the government's deflationary monetary policy that boosted the value of the krona. This coincided with strong competition from the U.S.S.R., which was dumping inexpensive timber products in Europe.

Faced with declining prices and profits, Swedish forestry companies were forced to hypothecate (pledge as security) their fixed assets and stocks to commercial banks when seeking loans. By the late 1920s, Svenska Handelsbanken, then Sweden's largest bank, feared that its lending position to the forestry industry was overexposed and sought ways to reduce its liabilities. It proposed that the Swedish financier Ivar Kreuger, who had gained a virtual monopoly over the production of matches worldwide, should take over its forestry industry holdings.

Kreuger was at first reluctant to accept the Handelsbanken's proposal since it would tie up capital, but, having recently bought several sawmill and pulp companies in the Sundsvall region in northern Sweden, he eventually saw possibilities in combining his forestry holdings with those of Svenska Handelsbanken. The merger would prevent cutthroat competition, reduce production costs, and consequently help raise and stabilize export prices. In addition, Kreuger would acquire several hydroelectric power stations as a result of the deal. His control over the power sources for the pulp and paper industry would also improve profitability.

In 1929 SCA was created with Svenska Handelsbanken selling its forestry shares to Kreuger's investment company, Kreuger & Toll, mainly on credit. SCA was designed to be a holding company to sell the pulp produced by its ten subsidiaries in northern Sweden. The companies that made up SCA included Bergvik & Ala, Skönvik, Sund, Trävaru Svartvik, Nyhamns Cellulosa, Torpshammars, Björknäs Nya Sågverks, Salsåkers Ångsågs, and Holmsund & Kramfors. The tenth company, Munksund, was added in 1934. The ten original companies' histories stretched as far back as the 17th century. The newly formed SCA immediately ranked as Europe's largest forestry company, a position that it would maintain until the mid-1980s. At the time of its founding, it accounted for almost a third of Sweden's total pulp exports.

The SCA combine amounted to a loose confederation with each member company having its own president and board of directors as well as administrative control over finance, sales outside of pulp, and forest management. Svenska Handels retained its role as primary lender to SCA and most of its member companies, and their shares were hypothecated to the bank.

The first few years of SCA's existence were devoted to rationalizing its operations and constructing Europe's largest and most modern cellulose plant at Östrand. The large investment costs meant that the company did not pay a dividend for the years 1930 and 1931. The following year SCA faced its first serious crisis with the suicide of Kreuger, an event that triggered the collapse of Kreuger & Toll. The value of SCA's share capital dropped from SEK 100 million to SEK 4 million, and Handelsbanken assumed control of SCA by purchasing its shares from the bankrupt investment company. Lacking experience in managing industrial concerns, Handelsbanken then sold most of its interest in SCA in 1934 to the Swedish industrialist Axel Wenner-Gren, the founder of the household appliance company AB Electrolux.

Handelsbanken continued to play a supervisory role as the main creditor to SCA. The company's performance under the chairmanship of Wenner-Gren was lackluster, and Handelsbanken grew concerned about the company's ability to repay its debts. In 1941 the bank forced Wenner-Gren to sign an agreement that reduced the nominal share capital from SEK 30 million to SEK 10 million and converted SEK 40 million of the company's assets to new shares that would be held by Handelsbanken, thus giving it majority control over SCA. The timing of the deal was fortunate because the United States was threatening to place SCA on a trade blacklist and freeze its assets in the United States because of Wenner-Gren's suspected business ties with Nazi Germany. Handelsbanken's assumption of control prevented this from happening.

COMPANY PERSPECTIVES


SCA's mission is to provide essential products that improve the quality of everyday life. SCA offers a wide range of products, services and solutions that are essential to the daily lives of people in all walks of life, in diverse communities around the world. The product portfolio comprises such consumer items as handkerchiefs, toilet tissue and baby diapers, packaging solutions, newsprint and publication papers and solid-wood products.

Handelsbanken used its controlling stake to carry out a reorganization of the company by consolidating the activity of each of its subsidiaries in the river valley where it was most dominant. It then decided to sell some of the subsidiaries to improve the company's financial position, with Bergvik & Ala and Hammarsforsens Kraft, a hydroelectric power company, being divested in 1943. Handelsbanken bought the remainder of Wenner-Gren's shareholding in SCA in 1947, and the company became a subsidiary of the bank.

PUBLIC, INTEGRATED FORESTRY FIRM FOLLOWING WORLD WAR II

The change in ownership coincided with a buoyant market for the forestry industry in the early postwar period, with prices hitting a peak during the Korean War boom of 195051. As a result, SCA finally managed to free itself from debt. In 1950 Handelsbanken decided the time was right to reap profits from its long-term involvement in SCA by introducing most of the company's shares on the Stockholm Stock Exchange. However, SCA's ties with Handelsbanken remained close, with the bank continuing to act as prime lender to SCA and maintaining a representative on the board of directors.

Axel Enström, who became SCA president in 1950, charted a new corporate strategy by promoting closer cooperation among the company's various subsidiaries. This led to a full-scale merger of their activities in 1954, which transformed SCA from a holding company into a single integrated forestry concern.

Starting in the late 1950s and continuing through the 1960s, SCA greatly expanded its activity from its traditional area of pulp and sawn timber into paper production, primarily newsprint and kraft paper, kraft liner, and corrugated board. Between 1959 and 1969, pulp production increased from 690,000 tons to 1.1 million tons, while paper production jumped from 160,000 tons to 600,000 tons, despite a reduction in the number of mills from 11 to 8. Revenues during this period climbed from SEK 375 million to SEK 825 million.

MOVING INTO VALUE-ADDED PRODUCTS

The appointment of Bo Rydin as SCA president in 1972 marked the beginning of a new period for the company. In 1974 Rydin decided to diversify the company into value-added fiber-based products. A year later SCA purchased Mölnlycke AB, which had been founded in 1849 as a Swedish spinning and weaving business but had been transformed into a manufacturer of disposable hygienic products in the 1950s.

KEY DATES


1929:
Ivar Kreuger forms Svenska Cellulosa Aktiebolaget (SCA) as a holding company for nine forest product companies in northern Sweden.
1932:
After Kreuger commits suicide, Svenska Handelsbanken assumes control of SCA.
1934:
Handelsbanken sells control of SCA to Axel Wenner-Gren, founder of AB Electrolux.
1941:
Handelsbanken regains majority control over SCA.
1947:
Handelsbanken takes full control of SCA, which becomes a subsidiary of the bank.
1950:
SCA is taken public with a listing on the Stockholm Stock Exchange.
1954:
SCA's various subsidiaries are merged, transforming SCA from a holding company into a single integrated forestry concern.
Late 1950s:
Company diversifies into paper production, specifically newsprint and kraft liner.
1975:
SCA enters the disposable hygiene product market through the acquisition of Mölnlycke AB.
1985:
By assuming majority ownership of Obbola Linerboard AB, SCA becomes Europe's largest linerboard producer.
1988:
Company acquires the Austrian firm Laakirchen AG, maker of magazine paper.
1990:
SCA acquires Reedpack, U.K.-based producer of corrugated boxes and newsprint.
1992:
SCA divests its hydroelectric power assets.
1995:
Company acquires a 75 percent controlling stake in PWA, the largest public pulp and paper company in Germany.
2001:
SCA acquires a North American commercial-tissue unit of Georgia-Pacific Corporation.
2004:
The tissue operations of New Zealand's Carter Holt Harvey Limited are acquired.
2005:
A restructuring involving the closure of 20 plants and the elimination of more than 5,000 jobs is launched.

By 1979, when it celebrated its 50th anniversary, SCA's activities covered all segments of the forestry industry, from raw materials to consumer products. It was Europe's largest private forest owner with 1.7 million hectares (4.2 million acres) of forest land, equivalent to half the size of Switzerland, which provided 60 percent of the company's timber needs, a high level of self-sufficiency by international standards. Its six mills, which produced 1.3 million tons of pulp and 1.1 million tons of paper, were powered by the company's own hydroelectric stations run by the Bålforsens Kraft AB (BÅKAB) subsidiary. The mills were equipped with pulp and paper machinery produced by another SCA subsidiary, Sunds Defibrator Industries AB. Pulp and paper accounted for half of SCA's sales of SEK 5.96 billion in 1979, and Mölnlycke was responsible for 30 percent of sales, with BÅKAB, Sunds Defibrator, and packaging companies making up the rest.

The 1980s were characterized by three major developments: a rapid increase in sales, growing internationalization through the purchase of several important European companies, and a reduced dependence on pulp and paper production combined with an emphasis on higher-value products. The company's diversification program during the early 1980s concentrated on increasing the number of its corrugated board operations in Sweden and the rest of Europe. Average annual output by these companies reached 750,000 tons by the mid-1980s, providing a captive market for 40 percent of SCA's production of linerboard, which is used as the outer surface of corrugated containers. SCA became Europe's largest linerboard producer in 1985 when it assumed majority ownership of Obbola Linerboard AB, a joint venture it had established with the U.S. St. Regis Paper Company in 1973.

Meanwhile, SCA was concentrating its pulp and paper production at four mills, with an average capacity of 300,000 tons, although its largest facility, the Ortviken newsprint plant, had a capacity of 600,000 tons. SCA then accounted for 25 percent of Sweden's total newsprint production. It also curtailed the production of pulp for outside consumers, its original business, with only 5 percent of its pulp being sold to third parties in the mid-1980s compared with 75 percent in the 1960s. This was designed to reduce its exposure to the sharp fluctuations in the world pulp market.

By the mid-1980s Mölnlycke had become the market leader for disposable consumer hygiene products, such as diapers and female hygiene goods, in Scandinavia and the Benelux countries and was Europe's leading supplier of disposable hygiene products to hospitals and industrial users. Bolstered by a cyclical upturn in the global forestry industry, SCA's sales almost doubled from SEK 6.7 billion in 1980 to SEK 12.6 billion in 1985, while profits before extraordinary items climbed from SEK 688 million to SEK 1.3 billion during the same period, reaching a peak of SEK 1.5 billion in 1984.

In 1987 SCA signaled its determination to expand beyond Scandinavia by raising SEK 1 billion through a new share issue to fund an acquisition spree for hygiene and packaging companies on the European continent. In January 1988 it purchased Peaudouce, France's leading disposable diaper producer, for SEK 2 billion in a move to strengthen Mölnlycke's market position in Europe and build up its consumer products sector, where profits were higher and more stable than in the traditional forestry products area.

Under new President Sverker Martin-Löf, SCA then turned its attention to the corrugated board sector. It acquired Italcarta, Italy's largest corrugated board manufacturer, in July 1988, followed by a number of other corrugated board manufacturers, among them Bowater Containers, Belgium. With the Italcarta deal, SCA for the first time was consuming more linerboard than it was producing itself, thereby no longer having to sell linerboard on the open market. Its position as a net consumer of linerboard also would protect the company against a drop in demand.

While SCA was limiting its production of pulp and linerboard to in-house needs, it also decided to reduce its production of newsprint at the Ortviken facility in favor of lightweight coated paper. This move toward the production of high-quality printing paper was confirmed with the purchase of a majority shareholding in Laakirchen AG, an Austrian producer of magazine paper, in October 1988. The deal extended SCA's range to cover all grades of printing paper. Control of Laakirchen also made SCA a leading producer of tissue paper in Europe.

ADDITIONAL ACQUISITIONS

The desire to broaden its international production base led to SCA's £1.05 billion purchase of the U.K. firm Reedpack in June 1990. The deal not only bolstered SCA's position as a leading European producer of corrugated boxes, but also made it a major producer of newsprint using recycled wastepaper. SCA's gradual shift from manufacturing newsprint from virgin fiber in Sweden to using recycled wastepaper gathered from Europe's cities reflected the increasing importance played by recycling in papermaking. The need to have access to wastepaper and to site manufacturing facilities close to consumers was one reason that SCA moved its operations near major population centers in Europe.

In late 1990 SCA turned its attention back to Sweden. It became the dominant shareholder in the country's third largest forestry concern, Mo och Domsjö AB (MoDo). The strategic alliance was forged to promote collaboration in printing, paper production, and joint investments in paper mills. Although SCA controlled slightly more than half of MoDo, there were no immediate plans to merge the two companies to form a concern that would rival Sweden's Stora, Europe's largest pulp and paper company, in size.

SCA's acquisition spree in Europe and the transformation of its product mix toward higher-value-added consumer products forced the company to divest some subsidiaries that were once considered central to its traditional activities in pulp and newsprint. In 1990 it completed the sale of its pulp machinery company Sunds Defibrator to Rauma-Repola in Finland. SCA also mortgaged half of its BÅKAB hydroelectric assets to the Swedish government-affiliated National Pension Funds to raise SEK 5 billion for new investments. In early 1991 it sold the tissue operations acquired from Laakirchen, as well as several units of Reedpack. SCA in 1992 exited from the energy sector entirely through the divestment of BÅKAB. These and other, smaller divestitures helped to ease the company's debt burden, which had increased substantially with the Reedpack acquisition. SCA's debt had reached 154 percent of equity in the wake of that purchase but by 1994 had been cut to 52 percent.

In late 1993 SCA entered into a joint venture with the South African Minorco and Mondi Paper groups to construct a massive £250 million ($370 million) plant in Aylesford, England (just south of London), to make newsprint using recycled paper as the raw material. In 1994 the company entered into a preliminary agreement to acquire nearly 90 percent of Otor Holding, a leading French packaging company, but the sides were not able to reach a final agreement on terms. In late 1994 SCA took full control of a joint venture, Scott Health Care, it had set up with Scott Paper Company of the United States in 1992. Philadelphia-based Scott Health Care specialized in adult incontinence and wound care products (and was later renamed SCA Incontinence Care Inc.).

SCA AT CENTER OF WORLDWIDE PAPER INDUSTRY CONSOLIDATION

The worldwide paper industry began an era of intense consolidation in the mid-1990s. The trend was fueled by extreme downswings and upswings, extreme even for a typically volatile industry. During 1993 and 1994 paper companies suffered through a severe downturn, with SCA's operating profit falling to SEK 2.17 billion in 1993 and to SEK 1.81 billion in 1994. During the next year the industry enjoyed one of its best years since World War II, and SCA saw its profits skyrocket to SEK 7.35 billion, while net sales nearly doubled from SEK 33.68 billion to SEK 65.32 billion. A significant portion of these increases, however, stemmed from the company's purchase of a 75 percent controlling stake in PWA, which had been the largest publicly traded pulp and paper company in Germany. SCA spent about SEK 7.5 billion ($1.02 billion) in early 1995 through two separate transactions to gain the stake. This deal temporarily vaulted SCA past Stora into first place among European forest industries groups (later in 1995 Finland's two biggest forestry groups merged to form UPM-Kymmene Corporation, a combination even larger than SCA-PWA). By late 1997 SCA had taken over PWA entirely. The acquisition of PWA significantly bolstered SCA's position in both packaging and tissues, while it also expanded SCA's activities into two new sectors: graphic and specialty decorative papers. The purchase, which was in large part debt financed, also increased SCA's debt load to about 70 percent of equity. The reason this ratio was not increased even more was that nearly simultaneous with its buyout of PWA, SCA sold its stake in MoDo since the alliance between the two Swedish firms had largely been unsuccessful.

By mid-1996 the forestry industry had entered into another downturn, with pulp prices having fallen by nearly half from the level of late 1995. More consolidations and asset swaps followed. In late 1996 SCA swapped its French diaper brand Peaudouce for Kimberly-Clark's tissue plant in Prudhoe, England, and a ten-year license to use the Kleenex brand on tissue sold in the United Kingdom and Ireland. SCA also made a number of moves to beef up its packaging operations, aiming for a 20 percent share of the European corrugated board market. In 1996 the company acquired three Italian board producers. In August 1997 it spent SEK 970 million ($122.6 million) to purchase the Italian packaging group Cochis. SCA in early 1999 paid SEK 2.6 billion ($329.5 million) for the corrugated board business of the U.K. company Rexam PLC and SEK 636 million ($80.6 million) for Danapak Papemballage, the third largest corrugated board firm in Denmark. SCA also expanded aggressively in central and eastern Europe, spending about SEK 300 million ($36.5 million) to open 14 packaging plants in the region. In early 1999 the company announced that it would double that investment over the next five years. At the end of 1998, SCA held 14 percent of the European corrugated board market.

SCA's results for 1998 were strong, with net sales of SEK 61.27 billion ($7.45 billion) and operating profits of SEK 6.43 billion ($781.8 million). At the time SCA touted itself as an integrated paper company with three key areas of activity: absorbent hygiene products, corrugated packaging, and graphic papers. In October 1999, however, SCA and MoDo consolidated their fine paper operations into a new company, MoDo Paper AB, which was initially 5050 jointly owned by the two companies. Fine papers comprised a portion of SCA's graphic papers unit and consisted of three plantsin Stockstadt, Germany; Hallein, Austria; and Wifsta, Swedenthat produced coated and uncoated grades of fine paper for use in magazines and other materials requiring high printing quality, as well as uncoated fine paper for office applications. These assets were combined with several MoDo plants to form the new company. MoDo Paper ranked as the third largest fine paper company in Europe with a market share of nearly 15 percent. SCA and MoDo (which changed its name to Holmen AB in early 2000) planned to list MoDo Paper on the Stockholm Stock Exchange within two years.

As it was moving to extricate itself from the fine paper sector, SCA continued to shore up its core areas through further acquisitions of the moderate variety. In August 1999 the company acquired Nicollet, a family-owned French firm making packaging for consumer products such as detergents, perfume, and processed food. That same month, SCA acquired AM Paper Group Ltd., the largest producer of private-label paper towels, toilet paper, and facial tissue in the United Kingdom. The company in November took over Nisa, which controlled 20 percent of the tissue market in Portugal. Finally, SCA closed out a very busy 1999 with its second packaging acquisition in the Nordic region, picking up Danisco A/S's packaging businesses in Denmark, Germany, and Norway, which included four corrugated packaging mills.

BREAKING INTO NORTH AMERICAN AND ASIA-PACIFIC MARKETS IN THE EARLY 21ST CENTURY

In March 2000 SCA and Holmen called off their plans to take MoDo Paper public because of an adverse stock market climate for the forestry sector. Instead, the companies later in the year agreed to offload MoDo Paper to the Finnish firm Metsä-Serla Oy in a complicated swap of assets. As part of the deal, SCA acquired Metsä-Serla's corrugated board division for EUR 200 million. SCA thereby gained access to the Finnish corrugated market with a market share of about 30 percent, attained leading positions in the Baltic countries, and also gained operations in Russia, Denmark, and Greece. Overall, the deal made SCA the largest corrugated board producer in Europe. In another part of the Metsä-Serla deal, SCA agreed to acquire Metsä-Serla's 66 percent interest in Metsä Tissue for EUR 650 million. The European Commission, however, blocked the deal having concluded that it would have given SCA too strong a position in the Nordic tissue market.

The opening years of the 21st century also saw SCA make a concerted push into North America. In mid-2000 the company acquired Johnson & Johnson's incontinence products brand, Serenity, thereby making its first foray into the North American retail sector. Early the following year SCA completed two more U.S. acquisitions that together comprised what the company called a "breakthrough" into the North America market. SCA acquired a commercial-tissue unit of Georgia-Pacific Corporation for $852 million. Ownership of this business, which included the Preference and Envision brands, gave SCA a 17 percent share of the commercial-tissue market in the United States. SCA also spent about $284 million for Tuscarora Inc., a packaging company based in New Brighton, Pennsylvania. Tuscarora was the U.S. leader in packaging systems for the protection of electronic and industrial products. In November 2001 SCA augmented its U.S. commercial-tissue operation through the $92 million purchase of Encore Paper Company Inc., which sold products in the Midwest and the northeastern and southeastern states.

By early 2002 Martin-Löf had shepherded through more than two dozen acquisitions over the previous five years, spending approximately SEK 40 billion ($3.8 billion) on these deals. One of the main outcomes of this buying spree was a steady shift of the company away from the highly cyclical businesses of printing papers and forest products. The buildup of operations in hygiene and tissue products and packaging, coupled with divestments, meant that by the end of 2001 forest products, newsprint, and graphic paper accounted for only about 15 percent of sales. Martin-Löf had also managed to integrate all the acquired operations while keeping SCA strongly profitable. With this track record behind him, Martin-Löf moved into the chairmanship in April 2002. Taking over as president and CEO was Jan Åström, a 46-year-old company veteran who had previously served as executive vice-president and deputy CEO.

Under Åström's leadership, SCA continued its acquisitive ways. In February 2002 the company strengthened its position in southern Europe and in the consumer tissue sector by acquiring the Italian firm CartoInvest for SEK 4.37 billion ($420 million). CartoInvest ranked as the fifth largest tissue producer in Europe. In packaging, SCA in 2002 purchased two firms that were major players in the burgeoning field of packages with advanced printing: V+D Stabernack, based in Germany, and Bertako, based in Spain. Among the several acquisitions completed in 2003, the most significant was that of DeKalb, Illinois-based Alloyd Company, bought for SEK 733 million ($97 million). Acquiring Alloyd moved SCA into a new market, plastic blister packaging, where the acquired company was the leading supplier for producers of consumer goods. Alloyd fit alongside SCA's other protective packaging operations.

SCA had also been moving into other geographic territories, namely, Latin America and the Asia-Pacific region. The company made its biggest venture into the latter region in May 2004 by buying the tissue operations of New Zealand's Carter Holt Harvey Limited for SEK 4.87 billion ($653 million). This deal instantly made SCA the leading maker of tissue products in Australasia. In packaging, meantime, the company centered its Asian ambitions on Singapore-based Central Package Group (Cenpack). Over a number of years, and through several separate purchases, SCA gradually built up its interest in Cenpack until it had reached 92.5 percent in April 2004. Cenpack was a leading player in the Chinese packaging market, with additional operations in Singapore, Malaysia, and Indonesia. It was later renamed SCA Packaging Asia, and SCA took full control of it in late 2006.

In the meantime, SCA around 2004 began contending with challenging environments in both the packaging and tissue sectors. The packaging market was plagued by overcapacity, price wars, and a weak European economy. In the tissue market, SCA was also troubled by overcapacity, while restructuring among European retailers led to increasingly fierce price competition. To counter these trends, the company launched restructuring programs in both late 2004 and August 2005 to cut costs and deal with industry overcapacity. All told, these plans involved the closure of 20 plants and the elimination of 5,000 jobs from the workforce, toward a goal of reducing annual costs by more than SEK 2.7 billion ($340 million) by 2008. Restructuring costs for 2005 totaled SEK 5.78 billion ($728 million), which reduced SCA's net profits to just SEK 454 million ($57 million), a sharp decline from the previous year's SEK 5.19 billion ($778 million). Revenues for 2005 increased 7 percent, amounting to a record SEK 96.39 billion ($12.14 billion).

After concentrating on restructuring efforts during most of 2005 and 2006, SCA revealed plans late in 2006 to hit the acquisition trail once again. The company targeted eastern Europe, China, and Latin America as markets with particular growth potential. Organic growth was on the agenda as well. For example, SCA was in the process of building a new tissue plant in the Moscow area of Russia, with production projected to begin in early 2008. Further funds for expansion were to come in part from the sale of the firm's North American packaging operations. SCA elected to divest this business in order to refocus its packaging business on Europe and Asia. In January 2007 SCA agreed to sell the North American unit, maker of protective packaging, consumer packaging, and temperature-assurance packaging products, to the private equity firm Metalmark Capital for $400 million.

John Burton

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

SCA Hygiene Products GmbH (Germany); SCA Hygiene Products AG (Switzerland; 99%); SCA Hygiene Products GmbH (Austria); SCA Hygiene Products SA-NV (Belgium); SCA Hygiene Products S.A. (France); SCA Hygiene Products (Fluff) Ltd. (U.K.); SCA Hygiene Products Nederland B.V. (Netherlands); Uni-Charm Mölnlycke B.V. (Netherlands; 40%); SCA Hygiene Products S.r.l. (Italy); SCA Hygiene Products S.A. (Spain); SCA Hygiene Paper España SL (Spain); SCA Hygiene Products spol.s.r.o. (Slovakia); SCA Hygiene Products AB; SCA Hygiene Products A/S (Denmark); SCA Hygiene Products A/S (Norway); SCA Hygiene Products Kft (Hungary); OY SCA Hygiene Products AB (Finland); SCA Incontinence Care Inc. (U.S.A.); SCA Tissue North America LLC (U.S.A.); Tuscarora Inc. (U.S.A.); Alloyd Co. Inc. (U.S.A.); SCA Hygiene Products Incontinence Care (Canada); ooo Svetogorsk Tissue (Russia); SCA Hygiene Australasia Limited (New Zealand); SCA Hygiene Australasia Pty Ltd (Australia); Sancella Pty Ltd (Australia); SCA Consumidor México, SA de CV; Sancela, SA de CV (Mexico); Papeles Higiénicos del Centro SA de CV (Mexico); SCA Graphic Sundsvall AB; SCA Timber AB; SCA Timber (UK) Ltd.; SCA Skog AB; SCA Transforest AB; SCA Graphic Laakirchen AG (Austria); SCA Emballage France SAS; SCA Packaging Nicollet SAS (France); SCA Packaging Belgium NV; SCA Packaging Switzerland AG; SCA Packaging Ltd. (U.K.); SCA Packaging Benelux BV (Netherlands); SCA Packaging Stiftung & Co KG (Germany); SCA Packaging Containerboard Deutschland GmbH (Germany); SCA Packaging Denmark Holding AS; SCA Packaging Finland Oy; SCA Packaging Obbola AB; SCA Packaging Munksund AB; SCA Packaging Sweden AB; SCA Packaging Fulda GmbH (Germany); SCA Packaging Ceska republica S.R.O. (Czech Republic); SCA Packaging Italia SpA (Italy); SCA Recycling Deutschland GmbH (Germany); SCA Recycling UK Ltd.

PRINCIPAL OPERATING UNITS

SCA Personal Care; SCA Tissue Europe; SCA Packaging Europe; SCA Forest Products; SCA Americas; SCA Asia Pacific.

PRINCIPAL COMPETITORS

The Procter & Gamble Company; Stora Enso Oyj; UPM-Kymmene Corporation; Kimberly-Clark Corporation; Georgia-Pacific Corporation; Smurfit Kappa Group.

FURTHER READING

Aakerhielm, Maria, "Svenska Cellulosa Stock May Gain on Expansion," Wall Street Journal Europe, December 28, 2001, p. 12.

Brown-Humes, Christopher, "SCA Tightens Grip on PWA," Financial Times, March 4, 1995, p. 11.

, "SCA to Buy Danisco Packaging Arm," Financial Times, November 2, 1999, p. 36.

, "Swedes Pull Out of Deal with French Packager," Financial Times, April 7, 1994, pp. 1, 18.

, "Swedish Forest Products Group to Buy Lancashire's AM Paper for £192m," Financial Times, September 1, 1999, p. 17.

, "Swedish Group's Deal Reinforces Its Paper Empire," Financial Times, January 6, 1995, p. 15.

Brown-Humes, Christopher, Jean Eaglesham, and Deborah Hargreaves, "Brussels Blocks Metsa Takeover," Financial Times, February 1, 2001.

Carnegy, Hugh, "SCA Buys Out Share of US Joint Venture," Financial Times, December 29, 1994, p. 14.

Fales, Gregg, "Some Consolation As SCA Gets Tissue from G-P," PIMA's Papermaker, March 2001, pp. 1617.

George, Nicholas, "SCA Chief Seeks to Widen Market Reach," Financial Times, April 15, 2002, p. 30.

Haslum, Bertil, Från Galtströms järnbruk till SCA: Återblickar i ett storföretags historia, 16731993, Sundsvall: Svenska Cellulosa, 1993, 283 p.

James, Rhiannon, "SCA's Juggling Act Promises Applause," Pulp and Paper International, June 1999, pp. 39, 41.

Jewitt, Caroline, "Nordic Deal Reshuffles the European Pack," Pulp and Paper International, September 2000, pp. 52, 5455.

Kenny, Jim, "Small Steps on a Long Journey," Pulp and Paper International, June 2001, pp. 23, 25.

Latour, Almar, "SCA, MoDo Form Joint Venture: Deal Creates Swedish Fine-Paper Giant," Wall Street Journal Europe, April 29, 1999, p. 8.

Marsh, Peter, "SCA to Boost Investment in Eastern Europe Packaging," Financial Times, March 9, 1999, p. 8.

McIvor, Greg, "SCA Offers DM550m for Remainder of PWA," Financial Times, August 15, 1997, p. 21.

McIvor, Greg, and Jonathan Ford, "Rexam Sells Corrugated Board Unit for £195m," Financial Times, December 22, 1998, p. 21.

Moore, Stephen D., "Cellulosa's Profit Fell 81% in Early 1992: Investors Are Undaunted by Swedish Pulp Firm's Setback," Wall Street Journal, June 12, 1992, p. A9B.

, "Scandinavian Paper Firms Wrestle with Price Declines," Wall Street Journal, September 5, 1996, p. B8.

, "Swedish Mills Seek Alliances amid Recovery: SCA Joins Offering Blitz to Build Cash for Plan to Retool Paper Plants," Wall Street Journal, August 30, 1993, p. A5C.

Munter, Paivi, "SCA to Cut 3,600 Staff," Financial Times, August 26, 2005, p. 14.

Reier, Sharon, "Virgin No More: Why Sweden's Svenska Cellulosa Is Betting on Recycled Paper," Financial World, March 1, 1994, pp. 34+.

"SCA and MoDo Make a Fine Match," Pulp and Paper International, June 1999, p. 7.

"SCA Expands Its Global Reach," Pulp and Paper International, May 2004, p. 11.

"SCA Focuses on Growth Through Acquisitions," Paperboard Packaging, November 1997, pp. 18+.

"SCA Is Ready to Go Shopping," Pulp and Paper International, June 2002, pp. 34, 3637.

Terhune, Chad, "Swedish Concern to Become No. 3 in U.S. Tissue Market," Wall Street Journal, January 23, 2001, p. A18.

Utterström, Gustaf, SCA 50 år: Studier kring ett storforetag och dess foregångare, Sundsvall: Svenska Cellulosa, 1979, 511 p.

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Svenska Cellulosa Aktiebolaget SCA

Svenska Cellulosa Aktiebolaget SCA

Box 7827
SE-103 97 Stockholm
Sweden
(08) 788 51 00
Fax: (08) 660 74 30
Web site: http://www.sca.se

Public Company
Incorporated
: 1929
Employees : 32,082
Sales : SKr 61.27 billion (US$7.45 billion) (1998)
Stock Exchanges : Stockholm London
NAIC : 11311 Timber Tract Operations; 11321 Forest Nurseries & Gathering of Forest Products; 321113 Sawmills; 321999 All Other Miscellaneous Wood Product Manufacturing; 322122 Newsprint Mills; 32213 Paperboard Mills; 322213 Setup Paperboard Box Manufacturing; 322211 Corrugated & Solid Fiber Box Manufacturing; 322215 Nonfolding Sanitary Food Container Manufacturing; 322212 Folding Paperboard Box Manufacturing; 322291 Sanitary Paper Product Manufacturing

Svenska Cellulosa Aktiebolaget SCA (SCA for short) is one of Europes leading forestry companies, specializing in absorbent hygiene products, corrugated packaging, and graphic papers. The company owns 4.4 million acres of productive forestlands, conducts sawmill operations, and uses equal amounts of recycled and fresh wood fibers in the products it makesmaking it the largest collector and user of recycled paper in Europe. Founded in 1929 by the famed Swedish financier Ivar Kreuger, SCA initially served as a marketing organization for pulp producers in northern Sweden. After transforming itself from a holding company into an integrated forestry concern in 1954, SCA gradually expanded into the areas of newsprint and linerboard over the next two decades. In 1975 the company entered the consumer products field with the purchase of Molnlycke AB, a manufacturer of fiber-based disposable hygiene products. This marked the start of SCAs increasing concentration on value-added products based on wood and its decreasing activity in traditional forestry products, such as pulp and low-grade paper. This development coincided in the 1980s and 1990s with SCA shifting some of its production from its Swedish homeland to the European mainland through a series of corporate acquisitions. In the 1990s SCA was also a major player in the trend toward worldwide forestry industry consolidation.

Formed in Late 1920s to Market Pulp

The roots of the establishment of SCA lie in the economic problems that hit the Swedish forestry industry in the 1920s. Forestry products, such as timber, pulp, and paper, were the countrys largest export items, but their competitive position in the European market was damaged during the 1920s by the governments deflationary monetary policy that boosted the value of the krona. This coincided with strong competition from the U.S.S.R., which was dumping cheap timber products in Europe.

Faced with declining prices and profits, Swedish forestry companies were forced to hypothecate (pledge as security) their fixed assets and stocks to commercial banks when seeking loans. By the late 1920s, Svenska Handelsbanken, then Swedens largest bank, feared that its lending position to the forestry industry was overexposed and sought ways to reduce its liabilities. It proposed that the Swedish financier Ivar Kreuger, who had gained a virtual monopoly over the production of matches worldwide, should take over its forestry industry holdings.

Kreuger was at first reluctant to accept the Handelsbankens proposal since it would tie up capital, but, having recently bought several sawmill and pulp companies in the Sundsvall region in northern Sweden, he eventually saw possibilities in combining his forestry holdings with those of Svenska Handelsbanken. The merger would prevent cutthroat competition, reduce production costs, and consequently help raise and stabilize export prices. In addition, Kreuger would acquire several hydroelectric power stations as a result of the deal. His control over the power sources for the pulp and paper industry would also improve profitability.

In 1929 SCA was created with Svenska Handelsbanken selling its forestry shares to Kreugers investment company, Kreuger & Toll, mainly on credit. SCA was designed to be a holding company to sell the pulp produced by its ten subsidiaries in northern Sweden. The companies that made up SCA included Bergvik & Ala, Skönvik, Sund, Travam Svartvik, Nyhamns Cellulosa, Torpshammars, Björknäs Nya Sâgverks, Salsâkers Angsâgs, and Holmsund & Kramfors. The tenth company, Munksund, was added in 1934. SCA was Europes largest forestry company, a position that it would maintain until the mid-1980s. At the time of its formation, it accounted for almost a third of Swedens total pulp exports.

The SCA combine amounted to a loose confederation with each member company having its own president and board of directors as well as administrative control over finance, sales outside of pulp, and forest management. Svenska Handelsbanken retained its role as primary lender to SCA and most of its member companies, and their shares were hypothecated to the bank.

The first few years of SCAs existence were devoted to rationalizing its operations and constructing Europes largest and most modern cellulose plant at Östrand. The large investment costs meant that the company did not pay a dividend for the years 1930 and 1931. The following year SCA faced its first serious crisis with the suicide of Kreuger, an event that triggered the collapse of Kreuger & Toll. The value of SCAs share capital dropped from SKr 100 million to SKr 4 million and Handelsbanken assumed control of SCA by purchasing its shares from the bankrupt investment company. Lacking experience in managing industrial concerns, Handelsbanken then sold most of its interest in SCA in 1934 to the Swedish industrialist Axel Wenner-Gren, the founder of the household appliance company Electrolux.

But Handelsbanken continued to play a supervisory role as the main creditor to SCA. The companys performance under the chairmanship of Wenner-Gren was lackluster, and Handelsbanken grew concerned about the companys ability to repay its debts. In 1941 the bank forced Wenner-Gren to sign an agreement that reduced the nominal share capital from SKr 30 million to SKr 10 million and converted SKr 40 million of the companys assets to new shares that would be held by Handelsbanken, thus giving it majority control over SCA. The timing of the deal was fortunate since the United States was threatening to place SCA on a trade blacklist and freeze its assets in the United States because of Wenner-Grens suspected business ties with Nazi Germany. Handelsbankens assumption of control prevented this from happening.

Handelsbanken used its controlling stake to carry out a reorganization of the company by consolidating the activity of each of its subsidiaries in the river valley where it was most dominant. It then decided to sell some of the subsidiaries to improve the companys financial position, with Bergvik & Ala and Hammarsforsens Kraft, a hydroelectric power company, being divested in 1943. Handelsbanken bought the remainder of Wenner-Grens shareholding in SCA in 1947 and the company became a subsidiary of the bank.

Public, Integrated Forestry Firm Following World War II

The change in ownership coincided with a buoyant market for the forestry industry in the early postwar period, with prices hitting a peak during the Korean War boom of 1950-51. As a result, SCA finally managed to free itself from debt. In 1950 Handelsbanken decided the time was right to reap profits from its long-term involvement in SCA by introducing most of the companys shares on the Stockholm Stock Exchange. But SCAs ties with Handelsbanken have remained close ever since, with the bank continuing to act as prime lender to SCA and maintaining a representative on the board of directors.

Axel Enström, who became SCA president in 1950, charted a new corporate strategy by promoting closer cooperation among the companys various subsidiaries. This led to a full-scale merger of their activities in 1954, which transformed SCA from a holding company into a single integrated forestry concern.

During the 1950s and 1960s, SCA greatly expanded its activity from its traditional area of pulp and sawn timber into paper production, primarily newsprint and kraft paper, kraft liner, and corrugated board. Between 1959 and 1969, pulp production increased from 690,000 tons to 1.1 million tons, while paper production jumped from 160,000 tons to 600,000 tons, despite a reduction in the number of mills from 11 to eight. Revenues during this period climbed from SKr 375 million to SKr 825 million.

Moved into Value-Added Products in the Mid-1970s

The appointment of Bo Rydin as SCA president in 1972 marked the beginning of a new period for the company. In 1974 Rydin decided to diversify the company into value-added fiber-based products. A year later SCA purchased Mölnlycke, which had been founded in 1849 as a Swedish spinning and weaving business but had been transformed into a manufacturer of disposable hygienic products in the 1950s.

Company Perspectives

Qualitative growth and international expansion for Hygiene Products and Packaging.

By 1979, when it celebrated its 50th anniversary, SCAs activities covered all segments of the forestry industry, from raw materials to consumer products. It was Europes largest private forest owner with 1.7 million hectares (4.2 million acres) of forest land, equivalent to half the size of Switzerland, which provided 60 percent of the companys timber needs, a high level of self-sufficiency by international standards. Its six mills, which produced 1.3 million tons of pulp and 1.1 million tons of paper, were powered by the companys own hydroelectric stations run by the Balforsens Kraft AB (BAKAB) subsidiary. The mills were equipped with pulp and paper machinery produced by another SCA subsidiary, Sunds Defibrator. Pulp and paper accounted for half of SCAs sales of SKr 5.965 billion in 1979, and Molnlycke was responsible for 30 percent of sales, with BA¨KAB, Sunds Defibrator, and packaging companies making up the rest.

The 1980s were characterized by three major developments: a rapid increase in sales, growing internationalization through the purchase of several important European companies, and a reduced dependence on pulp and paper production combined with an emphasis on higher-value products. The companys diversification program during the early 1980s concentrated on increasing the number of its corrugated board operations in Sweden and the rest of Europe. Average annual output by these companies reached 750,000 tons by the mid-1980s, providing a captive market for 40 percent of SCAs production of liner-board, which is used as the outer surface of corrugated containers. SCA became Europes largest linerboard producer in 1985 when it assumed majority ownership of Obbola Liner-board, a joint venture it had established with the U.S. St. Regis Paper Company in 1973.

Meanwhile, SCA was concentrating its pulp and paper production at four mills, with an average capacity of 300,000 tons, although its largest facility, the Ortviken newsprint plant, had a capacity of 600,000 tons. SCA then accounted for 25 percent of Swedens total newsprint production. It also curtailed the production of pulp for outside consumers, its original business, with only five percent of its pulp being sold to third parties in the mid-1980s compared with 75 percent in the 1960s. This was designed to reduce its exposure to the sharp fluctuations in the world pulp market.

By the mid-1980s Mòlnlycke had become the market leader for disposable consumer hygiene productssuch as diapers and female hygiene goodsin Scandinavia and the Benelux countries and was Europes leading supplier of disposable hygiene products to hospitals and industrial users. Bolstered by a cyclical upturn in the global forestry industry, SCAs sales almost doubled from SKr 6.7 billion in 1980 to SKr 12.6 billion in 1985, while profits before extraordinary items climbed from SKr 688 million to SKr 1.3 billion during the same period, reaching a peak of SKr 1.5 billion in 1984.

In 1987 SCA signaled its determination to expand beyond Scandinavia by raising SKr 1 billion through a new share issue to fund an acquisition spree for hygiene and packaging companies on the European continent. In January 1988 it purchased Peaudouce, Frances leading disposable diaper producer, for SKr 2 billion in a move to strengthen Molnlyckes market position in Europe and build up its consumer products sector, where profits were higher and more stable than in the traditional forestry products area.

Under its new president Sverker Martin-Lof, SCA then turned its attention to the corrugated board sector. It acquired Italcarta, Italys largest corrugated board manufacturer, in July 1988, followed by a number of other corrugated board manufacturers, among them Bowater Containers, Belgium. With the Italcarta deal, SCA for the first time was consuming more linerboard than it was producing itself, thereby no longer having to sell linerboard on the open market. Its position as a net consumer of linerboard also would protect the company against a drop in demand.

While SCA was limiting its production of pulp and linerboard to in-house needs, it also decided to reduce its production of newsprint at the Ortviken facility in favor of lightweight coated paper. This move toward the production of high-quality printing paper was confirmed with the purchase of a majority shareholding in Laakirchen, an Austrian producer of magazine paper, in October 1988. The deal extended SCAs range to cover all grades of printing paper. Control of Laakirchen also made SCA a leading producer of tissue paper in Europe.

1990s Marked by Additional Acquisitions

The desire to broaden its international production base led to SCAs £1.05 billion purchase of the U.K. firm Reedpack in June 1990. The deal not only bolstered SCAs position as a leading European producer of corrugated boxes, but also made it a major producer of newsprint using recycled wastepaper. SCAs gradual shift from manufacturing newsprint from virgin fiber in Sweden to using recycled wastepaper gathered from Europes cities reflected the increasing importance played by recycling in papermaking. The need to have access to wastepaper and to site manufacturing facilities close to consumers was one reason that SCA moved its operations near major population centers in Europe.

In late 1990 SCA turned its attention back to Sweden. It became the dominant shareholder in the countrys third largest forestry concern, Mo och Domsjö (MoDo). The strategic alliance was forged to promote collaboration in printing, paper production, and joint investments in paper mills. Although SCA controlled slightly more than half of MoDo, there were no immediate plans to merge the two companies to form a concern that would rival Swedens Stora, Europes largest pulp and paper company, in size.

SCAs acquisition spree in Europe and the transformation of its product mix toward higher-value-added consumer products forced the company to divest some subsidiaries that were once considered central to its traditional activities in pulp and newsprint. In 1990 it completed the sale of its pulp machinery company Sunds Defibrator to Rauma-Repola in Finland. SCA also mortgaged half of its BAKAB hydroelectric assets to the Swedish government-affiliated National Pension Funds to raise SKr 5 billion for new investments. In early 1991 it sold the tissue operations acquired from Laakirchen, as well as several units of Reedpack. SCA in 1992 exited from the energy sector entirely through the divestment of BAKAB. These and other, smaller divestitures helped to ease the companys debt burden, which had increased substantially with the Reedpack acquisition. SCAs debt had reached 154 percent of equity in the wake of that purchase but by 1994 had been cut to 52 percent.

In late 1993 SCA entered into a joint venture with the South African Minorco and Mondi Paper groups to construct a massive £250 million (US$370 million) plant in Aylesford, England (just south of London), to make newsprint using recycled paper as the raw material. In 1994 the company entered into a preliminary agreement to acquire nearly 90 percent of Otor Holding, a leading French packaging company, but the sides were not able to reach a final agreement on terms. In late 1994 SCA took full control of a joint venture, Scott Health Care, it had set up with Scott Paper Co. of the United States in 1992. Philadelphiabased Scott Health Care specialized in adult incontinence and wound care products.

The worldwide paper industry began an era of intense consolidation in the mid-1990s. The trend was fueled by extreme downswings and upswingsextreme even for a typically volatile industry. During 1993-94 paper companies suffered through a severe downturn, with SCAs operating profit falling to SKr 2.17 billion in 1993 and to SKr 1.81 billion in 1994. During the next year the industry enjoyed one of its best years since World War II, and SCA saw its profits skyrocket to SKr 7.35 billion, while net sales nearly doubled from SKr 33.68 billion to SKr 65.32 billion. A significant portion of these increases, however, stemmed from the companys purchase of a 75 percent controlling stake in PWA, which had been the largest publicly traded pulp and paper company in Germany. SCA spent about SKr 7.5 billion (US$1.02 billion) in early 1995 through two separate transactions to gain the stake. This deal temporarily vaulted SCA past Stora into first place among European forest industries groups (later in 1995 Finlands two biggest forestry groups merged to form UPM-Kymmene Corp., a combination even larger than SCA-PWA). By late 1997 SCA had taken over PWA entirely. The acquisition of PWA significantly bolstered SCAs position in both packaging and tissues, while it also expanded SCAs activities into two new sectors: graphic and specialty decorative papers. The purchase, which was in large part debt financed, also increased SCAs debt load to about 70 percent of equity. The reason this ratio was not increased even more was that nearly simultaneous with its buyout of PWA, SCA sold its stake in MoDo since the alliance between the two Swedish firms was largely unsuccessful.

By mid-1996 the forestry industry had entered into another downturn, with pulp prices having fallen by nearly half from the level of late 1995. More consolidations and asset swaps followed. In late 1996 SCA swapped its French diaper brand Peaudouce for Kimberly-Clark tissue plant in Prudhoe, England, and a ten-year license to use the Kleenex brand on tissue sold in the United Kingdom and Ireland. SCA also made a number of moves to beef up its packaging operations, aiming for a 20 percent share of the European corrugated board market. In 1996 the company acquired three Italian board producers. In August 1997 it spent SKr 970 million (US$122.6 million) to purchase the Italian packaging group Cochis. SCA in early 1999 paid SKr 2.6 billion (US$329.5 million) for the corrugated board business of the U.K. company Rexam and SKr 636 million (US$80.6 million) for Danapak Papemballage, the third largest corrugated board firm in Denmark. SCA also expanded aggressively in central and eastern Europe, spending about SKr 300 million (US$36.5 million) to open 14 packaging plants in the region. In early 1999 the company announced that it would double that investment over the next five years. At the end of 1998, SCA held 14 percent of the European corrugated board market.

SCAs results for 1998 were strong, with net sales of SKr 61.27 billion (US$7.45 billion) and operating profits of SKr 6.43 billion (US$781.8 million). At the time SCA touted itself as an integrated paper company with three key areas of activity: absorbent hygiene products, corrugated packaging, and graphic papers. In April 1999, however, SCA announced that it had entered into an agreement with MoDo to consolidate their fine paper operations into a new company that would initially be 50-50 jointly owned by the two companies but within two years be listed on the Stockholm Stock Exchange. Fine papers comprised a portion of SCAs graphic papers unit and consisted of three plantsin Stockstadt, Germany; Hallein, Austria; and Wifsta, Swedenthat produced coated and uncoated grades of fine paper for use in magazines and other materials requiring high printing quality, as well as uncoated fine paper for office applications. These assets would be combined with several MoDo plants to form the new MoDo Paper AB (MoDo itself would change its name prior to the exchange listing). MoDo Paper would be the third largest fine paper company in Europe with a market share of about 12 percent. This agreement was yet another step in the consolidation of the global forest products industry. SCA was likely to remain at the center of this continuing trend and participate in additional consolidating activities.

Principal Subsidiaries

SCA Forest and Timber AB; SCA Hygiene Products AB; SCA Hygiene Products AG (Germany); SCA Graphic Paper AB; SCA Fine Paper GmbH (Germany); SCA Packaging Holding BV (Netherlands); SCA Raw Materials and Logistics Europe N.V. (Belgium); AB SCA Finans; SCA Research AB; SCA Försäkrings-Aktiebolag.

Further Reading

Brown-Humes, Christopher, SCA Tightens Grip on PWA, Financial Times, March 4, 1995, p. 11.

_____, Swedes Pull Out of Deal with French Packager, Financial Times, April 7, 1994, pp. 1, 18.

_____, Swedish groups Deal Reinforces Its Paper Empire, Financial Times, January 6, 1995, p. 15.

Carnegy, Hugh, SCA Buys Out Share of US Joint Venture, Financial Times, December 29, 1994, p. 14.

Marsh, Peter, SCA to Boost Investment in Eastern Europe Packaging, Financial Times, March 9, 1999, p. 8.

McIvor, Greg, SCA Offers DM550m for Remainder of PWA, Financial Times, August 15, 1997, p. 21.

McIvor, Greg, and Jonathan Ford, Rexam Sells Corrugated Board Unit for £195m, Financial Times, December 22, 1998, p. 21.

Moore, Stephen D., Cellulosas Profit Fell 81% in Early 1992: Investors Are Undaunted by Swedish Pulp firms Setback, Wall Street Journal, June 12, 1992, p. A9B.

_____, Scandinavian Paper Firms Wrestle with Price Declines, Wall Street Journal, September 5, 1996, p. B8.

_____, Swedish Mills Seek Alliances Amid Recovery: SCA Joins Offering Blitz to Build Cash for Plan to Retool Paper Plants, Wall Street Journal, August 30, 1993, p. A5C.

Reier, Sharon, Virgin No More: Why Swedens Svenska Cellulosa Is Betting on Recycled Paper, Financial World, March 1, 1994, pp. 34 +.

SCA Focuses on Growth Through Acquisitions, Paperboard Packaging, November 1997, pp. 18 +.

Utterström, Gustaf, SCA 50 àr: Studier kring ett storforetag och dess foregãngare, Sundsvall: SCA, 1979.

John Burton

updated by David E. Salamie

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