COBALT has successfully represented Nextwood Two, a member of the HS Timber Group, in securing unconditional merger clearance from the Latvian Competition Council for the acquisition of Kurekss, a leading Latvian sawmill, and its subsidiary Kurzemes granulas, a wood pellet manufacturer. The clearance decision was adopted on 16 October 2025.
Through this transaction, HS Timber, an Austria–based wood processing group with production facilities in Europe and South America, strengthens its presence in Latvia. Earlier this year, in January 2025, the group acquired Vika Wood, another major sawmill located 84 km from Kurekss in north–western Latvia.
The merger attracted considerable attention from market participants, with several competitors urging the Competition Council to block the transaction. Concerns were raised that the merged entity could exercise buyer power to depress softwood (coniferous) sawlog prices to the detriment of suppliers or foreclose rival sawmills through strategic overbuying of logs.
The Competition Council investigated both theories of harm. In its clearance decision, the authority concluded that such anti–competitive effects were unlikely to materialise. The Council cited the continued presence of strong competition from other buyers, the significant market power of the state forestry company Latvijas valsts meži (the largest supplier of sawlogs in Latvia), and the ongoing economic feasibility of exporting raw materials as an alternative sales channel to dismiss concerns about exploitation of local suppliers. The authority also found that overbuying of the raw material would not be a credible strategy, as the global nature of the sawn timber market prevents any ability to recoup the costs through increased downstream prices.
Ultimately, the Competition Council determined that the merged entity would neither have the ability nor the incentive to engage in anti–competitive practices, and therefore granted unconditional clearance for the acquisition.
COBALT’s team was led by partner Uģis Zeltiņš, with Senior Associates Ivo Maskalāns and Kristīne Rāviņa providing key support throughout the merger control process.
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