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SCA Increases South American Presence

December 9, 2004

SCA has acquired the remaining shares in its 50/50 joint venture with Mexican company Copamex, the hygiene products company Copamex Productus al Consumidor S.A. de C.V. (CPG). The goal of the acquisition was reportedly to achieve efficient coordination with SCA's other operations, primarily in North and South America, and to attain full control over the company's future management and development in the rapidly growing markets in Mexico and Central America. It follows SCA's spring 2004 acquisition of half of Copamex's tissue operations.

With annual sales amounting to SEK 2.3 billion, CPG is the leading Mexican supplier of incontinence products, the next largest company within tissue and one of the three leading producers of feminine hygiene products. The major portion of operations is based in Mexico, but the company has production plants in Costa Rica and Nicaragua.

With a population base of slightly more than 100 million and a low per capita consumption, it is projected that the Mexican market will continue to show favorable growth. However, during 2004 the markets for tissue and feminine hygiene products have been characterized by intense competition, according to the company. Combined with increases in raw material prices, this has weakened the profitability of the hygiene products operations. In response to this situation, SCA and CPG initiated a cost-reducing action program.

The purchase price for Copamex's 50% interest in the share capital of CPG was reported to SEK 820 M.

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