Suzano Pulp and Paper announces final approval of merger with Fibria

Suzano Pulp and Paper announces to the market that it has obtained regulatory approval from the European Commission to conclude the combination of operations and shareholder bases with Fibria. With reviews by all required antitrust agencies duly completed, the companies can now proceed with the consummation of the transaction. The corporate restructuring, which will be concluded on January 14, 2019, will create Brazil’s fourth most valuable company (excluding financial institutions).

“We are about to transform a dream into reality and set a true milestone for Brazil. We will combine the best operational and sustainability practices of the two companies, the best professionals and the most important innovation projects in renewable resources,” said CEO Walter Schalka.
Once the corporate restructuring is concluded, the company will have a new brand, changing its name to Suzano. Walter Schalka will lead the company as CEO.

Suzano will have an annual production capacity of 11 million tons of market pulp and 1.4 million tons of paper. The company will have approximately 37,000 direct and indirect employees and 11 manufacturing units with the capacity to supply more than 90 countries and to ship exports worth R$26 billion, based on exports in the 12 months to September 30, 2018. From January to September this year, the two companies reported operating cash flow of R$10.1 billion and consolidated net revenue of R$24.5 billion. Together they already have invested R$4.9 billion in the first nine months of the year.

The transaction will be concluded in accordance with the plan announced on March 16, 2018, when the merger agreement was signed. On September 13, 2018, the shareholders of Suzano and Fibria approved the terms of the corporate restructuring at their respective Extraordinary Shareholders Meetings.

All other conditions precedent for the merger of Suzano and Fibria have been fulfilled. The transaction was approved without restrictions by the antitrust authorities in the United States (May 31), China (Aug. 31) and Turkey (Sept. 6). In Brazil, the agreement was approved, also without restrictions, by the country’s antitrust authority CADE (Oct. 11) and by the National Water Transportation Agency – ANTAQ (Nov. 14). On November 29, the antitrust authority in Europe also approved the restructuring, subject to the early termination of the hardwood pulp offtake agreement between Fibria and Klabin S.A.

The corporate restructuring involves a series of steps. Each Fibria shareholder will receive 0.4611 common shares in Suzano and R$52.50 per common share, which will be adjusted as provided for in the merger agreement approved by shareholders. The total amount to be paid on the date of the transaction’s consummation, i.e. January 14, will be announced to the market on January 10.

To fund the amounts to be paid to Fibria shareholders, Suzano has entered into commitments with international financial institutions to raise financing in the aggregate amount of US$9.2 billion, of which US$6.9 billion is a three-year bridge loan and the remaining US$2.3 billion is a six-year financing facility. The proceeds from the bridge loan signed in March, however, have been replaced over the course of the year by new funds at more attractive conditions. Due to the strong cash generation by Suzano in the intervening period, the capital requirement for completion has been lower than initially projected.

Consequent to the transaction, Suzano stock will be traded on the New York Stock Exchange (NYSE) and Fibria stock will be delisted from the São Paulo Stock Exchange (B3) and from the NYSE after the close of trading on January 3. The ADSs of Suzano is expected to trade on the NYSE as from December 10.

With the consummation of the merger between Suzano and Fibria, Suzano begins to forge a new path to the future. “We are very motivated by the challenge of continuing to reinvent ourselves to generate even more positive impacts for society,” said Walter Schalka.