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. Last Updated: 07/27/2016

Nordic Paper Group Looking To Surpass Industry Leader

HELSINKI, Finland -- Finnish-Swedish Stora Enso said Friday it would sell its non-core assets and hone its focus in order to dethrone International Paper as the world's No. 1 forest industry products' group. The group said it would sell power plants worth 2 billion euros ($2.13 billion) and focus on publication papers, fine papers and packagingboards. It said it would boost earnings while expanding through takeovers.

"Stora Enso's vision is to be the leading forest products company in the world, serving customer needs in an environmentally sustainable way and creating shareholder value," the group said in a statement.

It said it would propose a share buy-back program for up to 5 percent of the stock and give options to 200 key managers. It said it aimed for a 13 percent return on capital by 2001.

Stora Enso shares jumped on the announcements, outperforming gains of more than 1 percent by the main indices in Helsinki and Stockholm. Analysts said the power asset sale would boost its war chest and raise the likelihood of large deals.

In Helsinki, Stora Enso's most traded R share was up 5.7 percent at 13.48 euros ($14.17), and the Stockholm listing was up 6.3 percent at 118 kronor at midday.

"The ambition to sell off its energy assets and buy back some of its shares were a positive surprise," said Fredrik Martinson, analyst at Den Danske Bank.

Stora Enso is Europe's biggest forest industry group ahead of rival UPM-Kymmene but it trails International Paper globally in paper and board capacity.

According to the latest data compiled by Finnish Paperinfo, Stora Enso's capacity is 12.93 million metric tons a year against 14.1 million for International Paper and 8.5 million for UPM.

Two million euros freed from the sale of power assets will boost Stora Enso's acquisition budget. However, even medium-sized players have a market capitalization of over 2.5 billion.

Stora Enso said it needed a partner to in the demanding Asian market, and it would not rush into North America.