Suzano, main owner of Spinnova, invests in fiber company Lenzing

Translation: Original comment published in Finnish on 6/13/2024 at 6:43 am EEST.

Lenzing's main owner B&C Group and the world's largest market pulp producer Suzano of Brazil announced yesterday that Suzano has entered into a long-term partnership with B&C for its majority stake in the Austrian company Lenzing. Lenzing, listed on the Vienna Stock Exchange, is a global supplier of cellulosic fibers for the textile and non-wovens industry. 

Suzano will acquire a 15% stake in Lenzing from B&C. In addition, the shareholders will form a long-term syndicate, which will own a majority of 52.25% of the company. The price for the Lenzing shares in the transaction is EUR 39.70 per share, i.e. a total purchase price of 230 MEUR. The purchase price will be fully paid at closing. As part of the long-term partnership, Suzano has the option to acquire an additional 15 percent stake in Lenzing from B&C until the end of 2028. Under the agreement, B&C will remain a long-term shareholder in the company. The transaction is subject to approval by the relevant regulatory authorities.

Suzano invests in the apparel value chain important for Spinnova

Suzano is the main owner of Spinnova with a 19% stake and we forecast Suzano to be by far the largest single technology customer for Spinnova over the next decade. In addition, Lenzing owns approximately 2% of Spinnova. Therefore, we think that Suzano becoming a major shareholder in Lenzing is also interesting from Spinnova's point of view, although we do not expect it to have a significant direct impact on the company. We also do not believe that there are any competitive barriers to the arrangement.

However, by investing in Lenzing, Suzano has increased its commitment to the apparel value chain, which is already part of the company's strategy and important for Spinnova. We see this as somewhat positive news for Spinnova. We believe that Suzano, together with Lenzing (or B&C), could have the potential to build an interesting offering of different, more environmentally friendly textile fibers for the clothing industry and brands through Lenzing's lyocell and viscose products and Spinnova's fiber production plants, which we expect Suzano to own. In addition, the Lenzing partnership may also kill the very large and, in our view, highly questionable International Paper deal that Suzano is rumored by the media to be orchestrating, which we believe, at least under a worst-case scenario, could pose a risk to Suzano's plans to expand Spinnova fiber production (i.e. Spinnova's technology sales), if realized. 

The recently published comprehensive report on Spinnova is freely available here.