Deals

IKEA enters US timber market with 25,000-acre purchase

The Alabama property, managed by Oregon-based TIMO Campbell Global, adds to the 250,000 acres of timberland the furniture retailer already owns across the world.

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In its first acquisition of US timber property, Swedish furniture retailer IKEA has purchased 25,000 acres of forestland in Lowndes County, Alabama for an undisclosed sum.

IKEA said that the timber properties are to be managed by Portland, Oregon-headquartered timberland investment manager Campbell Global. The firm declined to comment.

“Entering the US market is a milestone for our investments in forests and we believe we will learn a lot while implementing our long-term approach to forest management and applying for a Forest Stewardship Council certification,” said IKEA’s head of financial asset management Krister Mattsson. He added that the company hoped to preserve and potentially increase the value of its timber holdings through sustainable management methods.

The timber properties were purchased as part of a €3 billion sustainability program through which IKEA invest in resources it consumes (both directly and indirectly through its products). In addition to an investment in support of an electric vehicle battery provider, in November, the initiative saw IKEA join a group of investors that included celebrity chef David Chang and KKR’s General David Petraeus in a $40 million Series D funding round for AeroFarms, an indoor farming company headquartered in New Jersey.

Serial shopper

IKEA, which operates 355 stores across 29 countries including 47 in the US, sources wood for its furniture from more than 50 countries, including Sweden, Poland, Russia and others. The company already directly owns 250,000 acres of timberland, including 30,000 acres in Romania purchased from Harvard Management Company in 2015 and additional properties in the Baltic States.

Through a partnership with the World Wildlife Fund established in 2002, IKEA has worked to encourage responsible forest management in Europe and Asia. According to its website, IKEA’s efforts have contributed to a 35 million-hectare increase in the amount of forestland certified by the Forest Stewardship Council.

In its supplier code of conduct, IKEA requires that companies selling its wood and board demonstrate that supplies are not derived from forests that have been illegally harvested or contributed to social conflict. The code also excludes genetically modified trees and timber from properties that have been identified as Intact Natural Forests and High Conservation Value forests.

IKEA did not return messages seeking further detail by the time of publication.