Lenzing AG, a company quoted on the Vienna stock exchange and a leader in the manufacture of cellulose fibres, has acquired a 75 % share in Czech pulp producer Biocel Paskov A.S. Biocel’s owner, Austrian company Heinzel Holding, will keep a 25 % share in the company and manage paper pulp distribution.

According to Lenzing, Biocel’s paper pulp production capacity runs to about 280,000 tons per year. Lenzing intends to invest EUR 50 million in the site's capacity expansion, measures to increase energy efficiency and recovery systems.

Biocel Paskov in the medium and long run will provide Lenzing with the option of producing paper pulp as well as dissolving pulp for fibres. Lenzing says, the transaction is pending anti-trust authority approval and the price is said to be in the range of six to seven times Biocel's earnings.

 “The acquisition of Biocel is an important strategic step towards the group's long-term extension of its vertical backwards integration. The expansion and restructuring of the site into a swing capacity producer of pulp will enable us to flexibly adjust to given pulp market situations and to either produce dissolving pulp for our fibre production or paper pulp for external customers. The acquisition is part of a hedging strategy to protect Lenzing from the impact of high pulp price volatility, “commented Peter Untersperger, Lenzing’s Chairman.

In view of the dynamic expansion in its fibres business, sustainable pulp supply is said to be becoming an issue of growing importance to Lenzing. Board member and head of the company’s fibres business, Friedrich Weninger comments: “The existing pulp supply structure of the Lenzing Group which is characterized by our own pulp production, long-term supply contracts and spot purchases will not be affected by the acquisition of Biocel for the time being.”

Lenzing says that Biocel meets strict European ecological standards and the company processes spruce wood from certified forestry, ensuring ecological reliability of the raw material. In addition, Biocell is said to use the same magnesium bisulphite process as the pulp factory at the Lenzing site, a process which Lenzing says it is the global technology leader in.

The former state-owned Biocel Paskov pulp factory started production in 1985, was modernized to ecological standards in the 1990s and was acquired by Austrian group Alfred Heinzel in 2001. Modernization continued and since 2004 Biocel has been cooperating with a neighbouring sawmill from Austrian wood industry group Mayr Melnhof, from which it obtains half of its raw materials in the form of wood chips. Biocel currently employs a staff of 380 and generates annual sales of about Euros 114 million.