Stora Enso to forge Europe’s largest listed pure play forest company via demerger

 Thursday, November 20, 2025

The worldwide forestry and renewable materials sectors are witnessing a noticeable structural evolution as Stora Enso, one of the world’s largest private forest owners and a leader in sustainable materials, announces its decision to separate its substantial Swedish forest assets business. Following a comprehensive strategic review initiated in June 2025, the company’s Board of Directors has initiated preparations for a statutory partial cross-border demerger, a transaction expected to be finalised during the first half of 2027.

The goal of this strategic separation is to create Europe’s largest listed pure play forest company, comprising over 1.2 million hectares of highly valuable forest land in Sweden, which had a fair value of approximately EUR 5.7 billion as of September 30, 2025. This specialized new entity will be headquartered in Falun, Sweden, and is slated for listing on both Nasdaq Stockholm and Nasdaq Helsinki.

The decision to proceed with a demerger, rather than a full divestiture (following the earlier sale of approximately 175,000 hectares for EUR 900 million), was assessed as the optimal path to maximise operational and shareholder value while simultaneously reducing group complexity.

For Stora Enso, the separation facilitates a sharper strategic focus on its core industrial operations: renewable materials and packaging. The company will continue to leverage its strong market positions with a more flexible, integrated, and cost-competitive production structure, optimizing capital allocation toward high-growth, innovative areas like biomaterials and sustainable packaging solutions.

For the New Company, the benefits are distinct and centered on long-term asset appreciation:

• Pure-play investment: It offers investors a singular, transparent focus on forest returns, which have demonstrated stability, showing a total return of approximately 7% per annum over the last three decades, and a low correlation to other asset classes.
• Inflation resilience: Forest assets, due to the naturally growing standing stock and land value, provide an inflation-resilient investment profile.
• Incremental value creation: The new company is positioned to capture additional long-term opportunities through advanced forest management, renewable energy initiatives, carbon sequestration programs, and land holding value optimisation.

Kari Jordan, Chair of Stora Enso’s Board of Directors, emphasised the milestone: “The separation and public listing of Stora Enso’s Swedish forest assets business will unlock value potential and focus on both the forest assets and industrial operations, enabling accelerated growth across each business.”

Despite the separation, the relationship between the two companies will remain strategically crucial. Stora Enso intends to enter into a long-term wood supply agreement for 18 years with the New Company. This agreement is designed to be mutually beneficial:

• Supply security: It will secure Stora Enso’s access to a portion of its Nordic wood and fiber supply (initially representing about 9% of its needs in the region) under market-based pricing, preserving the company’s strategic vertical integration while allowing it to retain its other forest assets.
• Committed demand base: For the New Company, the long-term contract provides a guaranteed demand base, which lowers risk as it builds its independent customer portfolio. The agreement includes non-exclusive volumes that will increasingly become available to other customers over its duration.

This structured partnership ensures a smooth transition and provides both entities with a solid foundation for independent growth.

In line with a typical spin-off (a type of demerger), all shares in the new company will be wholly owned by Stora Enso’s existing shareholders. Shareholders will receive shares in the New Company as demerger consideration, proportional to their current holdings in Stora Enso, maintaining the existing A and R share structure. This distribution method is generally tax-efficient and is a key mechanism for unlocking latent shareholder value.

The contemplated demerger is strongly supported by Stora Enso’s major shareholders, Solidium Oy and FAM AB, who collectively hold approximately 21% of the shares and 55% of the voting rights.

The finalisation of the demerger is subject to several conditions, including the approval by a General Meeting of Stora Enso to be convened later, as well as mandatory regulatory, legal, and co-determination procedures across all impacted countries. Stora Enso expects to formally announce the cross-border demerger during the second half of 2026, targeting completion in the first half of 2027.

In preparation for this monumental shift, Tuomas Hallenberg, currently Executive Vice President of Stora Enso’s Forest business area, has been appointed President and CEO of the Swedish forest business. Stora Enso is committed to maintaining an investment-grade rating for both the newly formed forest company and the remaining packaging and renewable materials business. The company is set to provide a comprehensive update on its refined strategy and objectives at its Capital Markets Day in London on November 25, 2025.

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Tags: forestry demerger, pure play forest company, renewable materials, Stora Enso, sustainable timberland investment