Suzano's U.S. Expansion: Clearwater Paper Acquisition in the Spotlight

Brazilian pulp giant Suzano (SUZ) is eyeing a significant expansion in the U.S. market with a potential acquisition of Clearwater Paper (CLW), as reported by Valor. This strategic move aligns with Suzano's long-term strategy to scale up in rapidly growing markets and strengthen its presence in the U.S. consumer packaging and food service market.

Clearwater Paper, with a market capitalization of nearly $410 million and net sales of $1.7 billion in the first nine months of 2024, manufactures pulp and paperboard for packaging. Suzano's interest in CLW comes after its debut in the U.S. market this year, with the purchase of two factories from Pactiv Evergreen. The acquisition of CLW would further solidify Suzano's position in the U.S. market and provide access to a broader range of packaging products.

Suzano's potential acquisition of Clearwater Paper could bring significant synergies, enhancing its U.S. presence. CLW's pulp and paperboard manufacturing capabilities would complement Suzano's existing operations, potentially increasing scale and efficiency. Additionally, CLW's hygiene paper business sale in June for $1.06 billion demonstrates its ability to divest non-core assets, further strengthening Suzano's balance sheet.

Suzano's CEO, Beto Abreu, has indicated that the company would continue to explore market opportunities, with potential deals aiming to increase scale. The acquisition of CLW would not significantly impact Suzano's balance sheet and could be financed through its cash generation, similar to its $110 million purchase of Pactiv's plants.

Suzano's net debt to adjusted EBITDA ratio stood at 3.1 times as of September 2024, indicating a strong financial position. The acquisition of CLW, valued at $541 million, is expected to have a minimal impact on Suzano's financial leverage and debt levels. Given Suzano's strong cash generation, the CLW acquisition can likely be financed through cash, similar to its previous acquisitions.

In conclusion, Suzano's potential acquisition of Clearwater Paper is a strategic move that aligns with its long-term growth plans in the U.S. market. The deal could bring significant synergies, enhance Suzano's U.S. presence, and strengthen its financial position. As Suzano continues to explore market opportunities, investors should keep a close eye on its U.S. expansion and the potential impact on its financial performance.