Moscow, Russia 08 Apr 2014 -- Russia's holding company Sistema is taking over sack kraft and paper sack manufacturer Segezha. The acquisition is scheduled for closure by the end of Q3 2014. 

Sistema JSFC has signed an agreement to acquire all of the shares in Segezha Pulp and Paper Mill (SPPM) and the timber processing firm Derevoobrabotka-Project (DOP) from the Bank of Moscow via its subsidiary Lesinvest. The acquisition is said to be pursued on a debt-free cash free basis, including only the "loans to SPPM and DOP and their subsidiaries from the Bank of Moscow."

The transaction is expected to close by the end of the third quarter this year. The deal has still to be approved by anti-trust authorities in Russia, Europe, Ukraine and Turkey.

With an output of 260,000 tpy of sack kraft paper and 1.2 billion paper sacks, SPPM is considered Russia's largest manufacturer of sack kraft paper and paper sacks. In Europe, the company ranks third behind Mondi and Billerud Korsnäs in sack kraft paper capacities and second in paper sack production, explained Sistema.

According to Sistema, prospects for SPPM and DOP are good. Both companies generated stable cash flow and had potential for the improvement of the shareholder value through restructuring and efficiency enhancement measures, the company said. Sistema also cited tapping new export markets as a future task.