Suzano and Fibria: From dream to paper, from paper to reality

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Suzano Papel e Celulose announces the signing of an agreement that will result in the combination of assets and shares of Suzano and Fibria Celulose S.A. The transaction will be concluded after approval from the Shareholder Meetings of both Suzano and Fibria, as well as regulatory authorities, and the fulfillment of conditions precedent that are typical to transactions of this nature.  After the transaction is concluded, Suzano will be the largest Brazilian company in the agribusiness sector and the 5th largest non-financial company in the country.

“Our dream of creating this company is now becoming a reality,” says Walter Schalka, CEO of Suzano Papel e Celulose.  “We plant, harvest, produce and transform pulp, a renewable raw material that is the basis for products that are part of the lives of people all over the world.”

Suzano and Fibria, which already share similar values and principles, will build a future together. The company resulting from this combination will have 37,000 employees and contractors, with assets positioned strategically in Brazil and around the world. Its 11 industrial units will produce annually 11 million tons of market pulp and 1.4 million tons of paper, with annual exports of around BRL 18 billion and investments planned for 2018 of about BRL 6.4 billion. Its cash cost will be among the lowest in the sector globally, underlining its efficiency and strengthening its competitiveness in a global market of more than 50 players.

“We are announcing a balanced transaction that underscores our business strategy,” explains Schalka.  The commitment signed by Suzano and Fibria stipulates that each share of Fibria will receive BRL 52.50, adjusted for inflation by the CDI rate from today to the date of financial settlement of the operation, and 0.4611 share of Suzano, adjusted as per the transaction documents.

Suzano will list Level 3 ADRs on the New York Stock Exchange (NYSE), keeping only one class of shares with 100% tag along rights, and will have free float of over 50%.  In the coming months, Suzano will request the registrations to the U.S. Securities and Exchange Commission (SEC) or applicable exemptions; and both Suzano and Fibria’s shareholders meetings will be called to approve the transaction.

With today’s announcement, Suzano reinforces its commitment to the highest standards of corporate governance based on transparency, fairness, accountability and corporate responsibility.  In November 2017, the company joined the “Novo Mercado” segment of B3, converting all its preferred shares into common shares at the ratio of one common share for each preferred share. This move represented an important strategic step towards new growth cycles such as the one being announced today and reaffirms Suzano’s commitment to Brazil, the capital markets and all its stakeholders.

The company will have strong cash generation and focus on the investment grade rating, while reinforcing its Financial Policy, which envisages target leverage between 2.0 and 3.0 times Net Debt/EBITDA in the long run. Preliminary estimates by market analysts indicate a present value of synergies of between BRL 8 billion and BRL 10 billion in the forestry, logistics and procurement areas, among others.  The transaction is being financed by a syndicate of international banks (BNP Paribas, J.P. Morgan, Mizuho and Rabobank).

Suzano will remain committed to the principles of meritocracy and to the creation and sharing of value. Its purpose is to pioneer cultivating life through its values: exploring innovation, planting the seeds of care, harvesting pride and improving every day, always with transparency, respect and trust.  “We are creating a future that is strong and kind,” says Schalka.

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