HELSINKI, Finland (AP) — Stora Enso Oyj is selling its North American unit for about $2.1 billion to an Ohio-based company owned by the private equity firm Cerberus Capital.
The deal announced Friday sent Stora Enso stock up 7 percent in Helsinki.
The operations being sold include eight factories and will be combined with those of Cerberus-owned NewPage Holding Corp., based in Dayton, Ohio, a North American coated paper producer that employs more than 4,300 people.
The transaction includes $1.5 billion in cash, a 20 percent equity stake valued at $370 million in the combined operation and $200 million in vendor notes, Stora Enso said.
The buyer also is assuming about $450 million in debt in the deal, which is expected to be completed in the first quarter of 2008.
''We believe that by combining Stora Enso's North American operations with those of NewPage — owned by Cerberus Capital, a leading private investment firm — we are contributing to the formation of a highly attractive player in the North American paper industry,'' CEO Jouko Karvinen said.
''This is the first major step in focusing our operations to improve the long-term earnings of Stora Enso.''
The Finnish-Swedish paper maker said the sale will not affect earnings in the third quarter of this year.
Stora Enso stock jumped more than 7 percent to 13.96 euros (US$19.59) in early afternoon trading in Helsinki.
Analysts said Stora Enso sold the mills for less-than-expected markets but they welcomed the move, as the group had invested heavily in North America but incurred losses.
''Stora Enso is getting out of seven years of difficult investments in North America. It has been an expensive adventure for them,'' said Harri Taittonen, chief analyst at Nordea Bank. ''Stora Enso is a European company which has had better success here, and this will allow the new leadership to concentrate on improving performance on one continent.''
Moody's Investors Service welcomed the sale, saying Stora Enso had taken ''a decisive step towards further industry consolidation,'' but said more should be done to improve performance.
It left its credit ratings on Stora Enso unchanged while it looks for ''more evidence of performance improvements in core operations.''
Karvinen, who was appointed head of the group in March, earlier this month announced a shake-up, doubling the divisions in the group to eight ''to give business area leaders and their teams clear responsibility for improving financial performance, speed up decision-making and improve external transparency through enhanced reporting.''
Stora Enso is one of the world's largest forest product companies, making magazine paper, newsprint, fine paper, pulp and packaging boards. It employs 44,000 people in more than 40 countries.
The group was formed in a 1998 merger between Finland's Enso and Stora of Sweden. The Finnish government is the major shareholder with more than 10 percent of the stock.