Ahlstrom Corporation

Ahlstrom to purchase a specialty paper company in China


Source: Ahlstrom Corporation

Ahlstrom, a global leader in fiber-based materials, today announced that it has signed a Memorandum of Understanding with Zhejiang Kan Specialty Material Co (KAN Paper) to acquire a majority in a specialty papers company in China. The assets in the joint venture comprise a paper machine, water treatment, power plant and 15 hectares of land in Kaifeng, China as well as the crepe paper business of KAN Paper. Ahlstrom will hold 70% of the shares in the joint venture.

The production capacity of the Kaifeng plant is currently 12 000 tons. The plant is located 200 kilometers southwest of Hangzhou and it employs 130 people.

'The deal is another step ahead in Ahlstrom's growth strategy, expanding our operations in the fast-growing markets outside Europe. The joint venture further strengthens our position as the global leader in the specialty papers markets and also creates a platform that enables future expansions of our businesses in China', says Jukka Moisio, President and CEO of Ahlstrom.

'We will develop this state of the art site, built in 2004, into a highly competitive manufacturing platform to serve our customers in the specialty materials markets. Ahlstrom's extensive network of sales offices in ten Asia-Pacific countries enhances our ability to serve our customers across the continent', comments Risto Anttonen, Senior Vice President, Commercial Operations of Ahlstrom.

The joint venture will be part of Ahlstrom's Technical Papers business area and it is aimed to serve the local crepe paper markets.

'The joint venture will also produce a wide range of other technical paper grades. Currently, the paper production is delivered to the local markets in China, but we aim to expand the customer base by utilizing our global specialty materials sales network', says Patrick Jeambar, Senior Vice President, Technical Papers of Ahlstrom.

The market for crepe papers is estimated to grow approximately 15% annually in China.

Ahlstrom expects to sign a binding agreement on the joint venture during the third quarter of 2007 and close the deal by end of 2007. The completion of the transaction is subject to the regulatory approvals and satisfactory conclusion of the due diligence process. In their negotiations, the parties have agreed that Ahlstrom has an option to purchase the remaining share in the joint venture after two years time.

Ahlstrom has currently one manufacturing site in China producing dust filtration materials as well as three sales offices.

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