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Sweden’s SCA offers Tea Party-backers billions for tissue firm

Swedish paper firm SCA said Thursday that it had placed a 12.6 billion kronor ($1.9 billion) bid to purchase the European tissue wing of US pulp and paper company Georgia-Pacific, a firm owned by Tea Party movement financiers David and Charles Koch.

“SCA has delivered a biding offer to acquire Georgia-Pacific’s European tissue operations,” the Swedish company said in a statement.

“The deal is a strategic fit and will strengthen our product offering and geographic reach in Europe,” SCA president and chief executive Jan Johansson said, adding “it also leads to substantial synergies.”

Georgia-Pacific, one of the world’s biggest makers of tissue, pulp and paper, last year saw its European tissue business pull in sales of €1.25 billion euros.

“The annual synergies are estimated at €125 million, with full effect in three years after closing,” SCA said, adding that related costs were expected to tick in at 130 million euros.

“Already in year one, the transaction is estimated to contribute to an increase of earnings per share and cash flow. With fully realised synergies, earnings per share are expected to increase with approximately 1.70 kronor,” it said.

SCA said it had the needed credit facilities to complete the deal to buy the Georgia-Pacific unit, which among other things makes the widely-known Lotus brand of tissue paper and counts some 5,000 employees and 15 production sites in seven countries.

The Swedish company did not say when it expected the deal to close, pointing out that Georgia-Pacific’s acceptance of the offer would depend on the outcome of discussions with employee representatives.

If approved by the American company, the deal would also still need a green light from competition authorities, SCA said.

Following the news, SCA saw its share price rise 1.2 percent in early morning trading on a Stockholm stock exchange down 1.14 percent.

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COLOMBIA

Swedish firm SCA in Colombian diaper probe

A company owned by scandal-hit Swedish industry giant SCA is suspected of having been part of two secret cartels to push up the price of, among other things, toilet paper and diapers in Colombia, according to a Swedish newspaper.

Swedish firm SCA in Colombian diaper probe
A company partly owned by a Swedish firm is being investigated for alleged diaper cartels. Photo: Pontus Lundahl/TT

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The companies involved are alleged to have entered into secret deals on the prices as well as quality of their products, reported Swedish newspaper Dagens Nyheter on Tuesday. They are part of an ongoing investigation by Colombian authorities.

Swedish forest and paper group SCA owns 50 percent of one of the firms, Productos Familia, which is a market leader in the Colombian soft paper industry.

The company, which among other things produces diapers and toilet paper, is accused of having been involved in starting these suspected cartels in 1998 and 2000.

“We take all these suspicions seriously. Familia cooperates fully with authorities to assist the investigation. The probe concerns activities up until 2013 and extends to, apart from Colombia, other countries in South America. It is yet too early to say exactly what and which countries are part of this,” SCA sustainability officer Kersti Strandqvist told Swedish newspaper Dagens Nyheter.

Stockholm-based SCA is Europe's largest private owner of forest land and manufactures paper, mainly to be used for personal care products.

The reports come as the company struggles to restore its reputation after reports of “excessive” use of private jets by its corporate heads.

READ MORE: How private jets took down a Swedish industry giant

Earlier this year, it was claimed that managers' families had been taken to a hunting lodge owned by SCA and that spouses and children had accompanied executives on foreign business trips, including to the Olympic Games in London in 2012.

The scandal caused unprecedented upheaval to Sweden's boardrooms, with four of its biggest companies – Handelsbanken, Industrivärden, SCA and steelmaker SSAB – all receiving new chairmen earlier this year.