MercoPress. South Atlantic News Agency

Chilean pulp company expands into Brazil; becomes major global player

CMPC/Aracruz Cellulose operation includes 212.000 hectares with eucalyptus

Chile's blue-chip Ipsa index ended up 0.7% Wednesday, reaching a year high following Chilean pulp and paper products manufacturer Empresas CMPC SA expansion into Brazil, which would position the company among the five leading producers of the world.

CMPC, Chile's second-largest pulp and paper company after Copec COP.SN Arauco unit, climbed 8.7% Wednesday after it announced it will buy Brazilian paper and pulp producer Aracruz Celulose SA's (ARA) Guaiba unit for around 1.4 billion US dollars.

The deal would give CMPC, controlled by the Matte family, access to the world's most competitive pulp market and nearly double production by 2013, according to Sao Paulo-based brokerage Itau Securities.

CMPC would be paying little for an asset that would also give it the ownership of 212,000 hectares of land of which 60% is planted with eucalyptus trees ready to be harvested, analysts said.

In the foreign-exchange market the Chilean Peso posted marginal gains on Wednesday against the US dollar, rising for the eighth time in nine sessions. The peso closed 0.3% higher at 539.40/539.70 per dollar compared with Tuesday's close of 541.00/541.50.

The peso has strengthened around 19% against the dollar so far this year after slumping 22.3% in 2008.