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Bowater: going for paper profits
Capping a major two-year corporate restructuring, Bowater Industries in September sold its UK paper-making operations to management and other investors in a 38 million cash buyout. The investor group consisted of 71 managers, who now own 20% of the UK business; the Electra and Globe investment trusts, which together own 70%, and Scandinavian Bank, with just under 10%.
The sale marked the final stage of a long-term divestiture programme by London-based Bowater, as it sought to withdraw from the pulp and paper-making business in the northern hemisphere and to focus on packaging and associated products, builders' supplies and other services. The corporate transformation began in 1984, with the demerger of Bowater's US pulp and paper mills.
The UK operation is Britain's biggest paper-making concern, with an annual capacity of around 480,000 metric tons. But it was a heavy drag on Bowater's profitability, generating a return of only 1% on sales last year.