Ready for the paper mill. The acquisition of one of Slovakia's largest firms SCP Ružomberok by the Austrian company Neusiedler AG will form one of the largest players in the European office paper market.
The Austrian business, owned by one of the world's top paper producers, Mondi Paper, based in South Africa, won out over eight other companies vying for the SCP purchase. SCP shareholders approved a 500 million crown bond issue on June 29 to give the official nod of approval to the deal.
The final hurdle for the acquisition lies with clearance from the Slovak Anti-Monopoly Office. But while a decision is expected in the next few months both SCP and Neusiedler are looking to the future expectantly.
Gunter Hassler, executive director for Neusiedler AG and the person responsible for SCP's business development said the purchase would benefit both companies.
"SCP adds capacity which Neusiedler is lacking. We have needed more paper production to improve our market position and SCP gives us this opportunity. And with its extremely strong sales organisation and distribution all over Europe, Neusiedler has access to some of the largest office customers, and this is a big benefit to SCP," Hassler said.
SCP currently produces 80% of its goods for export and Neusiedler has traditionally been SCP's biggest competitor on the Slovak market. Anti-Monopoly Office representatives had yet to be approached by Neusiedler at press time, but if official approval is given, the full merger process is expected to take four years.
Milan Filo, general director of SCP Ružomberok, said that the acquisition would boost his firm's competitiveness on the European market, and eventually, beyond European borders.
"The future of business is in globalisation, which means in order to survive, a company must find a synergy with partners and specialise its business. This was one of the reasons SCP signed with Neusiedler and it will mean a lot for our company towards strengthening our position in the European market and our competitiveness abroad."
The director of the Slovak Pulp and Paper Research Institute (VUCP), Štefan Boháčik, said that the European market was large enough to support the combined forces of the paper giants, and that the move would place the company in the top ranks of European paper producers. A foreign investor was a necessary element for SCP to compete on a larger scale, Boháčik explained, adding that the abundance of raw material available in Slovakia could support an increase in capacity.
"I think that the market for office paper is very sound, with a big potential for enlargement in central and eastern Europe. When the market is good, this is a good base to build upon. With this acquisition, Neusiedler and SCP will be a very dominant player in this field," Boháčik said.
One of the downsides of the purchase may be shouldered by Harmanecké Papierne Harmanec, a hygienic paper producer in which SCP has a 49% stake. Hassler said that more time is needed to decide on the ultimate fate of Harmanec and its relation to SCP. No decisions have been made of yet, he said, and several ideas are presently being discussed.
Miroslav Vais, director for Harmanec, felt that his company would continue to be partly owned by SCP, and was unconcerned with any possible sale of the stake or resulting changes.
"I am not concerned with any changes with Harmanec, because Neusiedler's business is mainly in office products, while we focus on hygienic products. I don't believe the purchase will influence my company at all because the focus of production is so different. We are good at what we do and Neusiedler has no experience with hygienic paper products," Vais said.
In 1999, SCP netted 223 million crowns - a 52 million crown increase on the previous year - with revenues totalling 7.9 billion crowns. Exports totalled just over 6 billion crowns, with more than half of this coming from EU member countries. For the year 2000, the company anticipates revenues of 10 billion crowns and a gross profit of more than 900 million crowns.
In 1999 Neusiedler boasted sales of 454 million euros (19,608,000 crowns) in 1999, with a 25 million euro profit. The company currently employs 1,400 people.
Additional reporting by Martina Pisárová and Zuzana Habšudová