The Swedish forest owners’ concern “Sodra” has become the largest private landowner in Latvia with more than 124,000 ha after acquiring the shares of SIA “Bergvik Skog” (which owns 111,100 ha) for 324 million euros.
Forestry
Information published in Swedish on the website of the Swedish company “Bergvik Skog” shows that the company has sold all its investments and company shares to the Swedish concern “Sodra”, whose Latvian subsidiary, SIA “Sodra mežs”, already owned 13,000 ha of land. Consequently, following this transaction, “Sodra” will become the largest private landowner in Latvia. Significantly, in July of this year, 100% of the shares of the second-largest private forestry company, SIA “Foran Real Estate” (owning 54,207 ha), were acquired by the IKEA subsidiary “IRI Investments B.V.”, making it one of the largest landowners in Latvia.
Long-standing CEO of SIA “Bergvik Skog” Lars Georg Hedlund pointed out that significant investments in forestry have been made over the years, providing work for approximately 500 different contractors.
Two perspectives
Māris Liopa, Chairman of the Board of the Forest Owners and Managers Confederation of Latvia and a forest owner himself, evaluates this transaction in two ways. “Look at what a forest owners’ cooperative with more than 100 years of history can achieve! The fact that a Swedish forest owners’ cooperative, which is a major private forest owner, is buying companies in Latvia is logical and means the continuation of best forestry practices on the “Bergvik Skog” properties.
At the same time, the transaction amount shows the true value of Latvian land and the 'green gold' growing on it, which will continue to rise, a fact that was ignored for a long time by the state-owned Latvian Mortgage and Land Bank a few years ago,” M. Liopa explains his position. Looking at the prices in this deal, he concludes that he once lost 6.8 million euros. “I don’t know if it was stupidity or a deliberate action by the bank,” M. Liopa replies when asked why this happened. He believes that politicians should not have allowed a situation where large areas of land (forests) fell into foreign ownership, but now “the train has already left” because prices have risen significantly. I hope that no Latvian government will ever decide to privatise Latvian forests,” says M. Liopa.
Too high a price
According to the Swedish company Bergvik Skog, there was significant interest in acquiring the company's shares, and the state-owned joint-stock company Latvijas valsts meži (LVM) was among those interested. The company reaffirmed to "Dienas Bizness" that it had been among the bidders. At the same time, it was pointed out that LVM congratulates both parties on the successfully concluded deal. According to information available to LVM, the final price for which the company was acquired significantly exceeded the price ceiling set in LVM's offer, which had been calculated based on future cash flow and income from socially responsible, environment-friendly and sustainable forest management, with the goal of increasing the value of forest properties in the long term, while at the same time not anticipating any activities related to the resale of these properties. LVM explained that the price offer is also directly dependent on the type of forest management. LVM believes that the Latvian forestry sector is currently seeing the arrival of a truly experienced and responsible forest owner at the top of the list of Latvian forest owners.
Continuing the started work
OPINION
Aiga Grasmane, Executive Director of the Forest Owners Association of Latvia:
The specific nature and task of such companies is to increase the value of the property, because in forest properties that reach the market, felling is mostly not possible in the near future. Therefore, the main task is to put the properties in order, replant the forest with high-quality planting material, and tend to young stands. We hope that the new owner, relying on the company's stable staff and professionals in forest management, will continue the work started by the previous owner, “Bergvik Skog”, to create a more productive and higher-quality forest. By carrying out targeted forest cultivation, in the future one could expect stands that are at least 25% more productive and more resistant to climate change, which is a common benefit for the entire society.