ArborGen to acquire Bluff City tree nursery
Posted on Saturday, August 25, 2007
International Paper Co. ’s tree nursery near Bluff City will become the property of ArborGen LLC, a Summerville, S. C.-based tree-biotechnology company.
The nursery’s change in ownership is part of a larger set of agreements in which Arbor-Gen’s three one-third owners — Memphis-based International Paper, MeadWestvaco Corp. of Glen Allen, Va., and Rubicon Limited of Auckland, New Zealand — will contribute their nursery and seed-orchard businesses to ArborGen in a transaction valued at $ 60 million.
The Bluff City nursery produces genetically improved seedlings through traditional plant breeding and selection methods, said David Neale, a tree geneticist at the University of California at Davis.
ArborGen uses a seed-cloning technique to propagate genetically improved seedlings and has conducted field tests of genetically engineered trees, trees in which they have inserted foreign genetic material. Recently ArborGen has focused on developing trees for ethanol production stock. To date, genetic engineering in trees has not been commercially deployed, except in China.
“ArborGen didn’t have the capacity to produce plant material and market it,” Neale said. “Now, with this acquisition, they do.”
ArborGen said Thursday in a prepared statement, “The transaction is a significant step forward in ArborGen’s strategy for future growth and positions the company as a full-service tree supplier to the global forestry industry.”
The operations involved in the deal sell 350 million seedlings annually — representing more than one-third of the pine seedling market in the South and almost 15 percent of the region’s hardwood seedling market. The nurseries, which include more than 20 locations in four countries, generate more than $ 25 million in sales and employ 185 people.
International Paper’s Bluff City nursery, which was established in 1980, covers 700 acres, manager Mark Chupp said. The nursery employs eight full-time and two part-time workers, and each year it sells about 45 million pine seedlings and more than 3 million hardwood seedlings, Chupp said.
Approximately 90 percent of the Fred C. Gragg SuperTree Nursery’s young trees go to Arkansas buyers and the balance to buyers in Louisiana, Oklahoma and Texas, he said. The nursery’s coolers can store about 4 million seedlings at 35 degrees Fahrenheit.
“This has been a very good business for International Paper,” Chupp said.
“They have told us there will be no changes.”
Sale of the International Paper nursery comes as no surprise. In July 2005, the company announced plans to sell its timberland and a number of its mills. During 2006, International Paper announced the sale of the following Arkansas assets: 540, 000 acres of timberland in April, Fordyce kraft-paper plant in June, Pine Bluff pulp and paper mill in October, Leola sawmill in November, and Gurdon plywood and sawmill in December.
The nursery is the final International Paper asset in Arkansas scheduled to change hands. The company continues to operate corrugated container plants in Conway, Jonesboro and Russellville.
ArborGen’s acquisition of tree nurseries is similar to Monsanto’s acquisition years ago of agricultural seed companies, he said, and many of ArborGen’s employees are former Monsanto people.
ArborGen’s primary competitor has been Vancouver, Canadabased CellFor Inc. CellFor also uses somatic embryogenesis but eschews genetic engineering.
Arkansas has two other tree nurseries, one operated by Weyerhaeuser Co. in Magnolia and one operated by the Arkansas Forestry Commission in Baucum near Galloway.
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