Aditya Birla group acquires Swedish speciality pulp major for $340 million

Kumar Mangalam Birla-led Aditya Birla Group has acquired leading international speciality pulp and bio-refinery company Domsjö Fabriker, from a Swedish consortium for $340 million.

Domsjö FabrikerThe acquisition was made through its global firms Thai Rayon Public Co Ltd and Indo Bharat Rayon (Indonesia).

This is the second major acquisition by the group within a week; on Saturday, Aditya Birla Chemicals (India) Ltd acquired the chloro chemicals division of Kanoria Chemicals and Industries Ltd for Rs.830 crore (See: Aditya Birla Group acquires Kanoria Chemicals unit for Rs830 crore)

The $30-billion group (in terms of market cap), which figures in the Fortune 500 list, aims to emerge as a $65 billion behemoth by 2015. It expects both organic and inorganic growth. About 60 per cent of the revenues of the group – which operates in 27 countries – are from its overseas operations.

The Swedish acquisition is in line with the group's strategy of meeting a substantial part of its speciality pulp requirements from captive sources. The Swedish company's high quality pulp will enable the Aditya Birla group to enhance the supply of top quality premium viscose staple fibre (VSF) to its customers. Pulp and fibre is a core business for the group, which is also the world's largest producer of VSF.

Speciality pulp produced by Domsjö finds primary use in the textile segment (VSF and viscose filament yarn). Around 25 per cent of the Swedish firm's production is used in premium applications, such as binding agents for medical products, particularly pharmaceutical tablets and in casings (wraps) for the food industry. Its bio-refinery enables the firm to extract the full value from its operations by the production of ethanol and ligno-sulphate as by-products. Ethanol obtained from its bio-refinery is used in bio fuel, paint and printing sectors, while ligno-sulphate is used as an additive in concrete, ceramics and dye pigments, among others.