SWEDEN (From news reports) -- Svenska Cellulosa AB will acquire BSN Medical for 2.74 billion euros ($2.9 billion) as the Swedish maker of Velvet tissues expands into wound care and orthopedics ahead of a planned split from forestry products.

The purchase of the dressings-and-bandage maker from private equity firm EQT Partners AB, to be funded through debt, is expected to generate annual synergies of 30 million euros within three years, the Stockholm-based company said in a statement on Monday. BSN will add to earnings from year one, it added.

Chief Executive Officer Magnus Groth is bulking up the faster-growing hygiene side of the company to prepare for its separation into a new listed company, a move that will sever ties with the pulp and paper that are the heritage of the SCA. Both SCA's existing incontinence-products business and BSN share similar market characteristics and sales channels, so there are opportunities for cross-selling, he said.

"I see this as fitting with incontinence, where a substantial portion is sold to institutional clients, hospitals and care facilities," Markku Jarvinen, an analyst at Evli Bank, said by phone. SCA is going in a new direction, which can be a "positive thing," ha added.

With a price of 20 times last year's operating profit, the purchase "isn't exactly cheap," Evli's Jarvinen said.

Groth signaled in an interview last month that SCA could be poised for an acquisition to help build a global hygiene-products company that can rival Kimberly-Clark Corp. and Procter & Gamble Co. Acquiring BSN will add brands such as Leukoplast breathable dressings. BSN will add some 6,000 employees and factories in 11 countries.

"It's a new growth platform for SCA," Groth said on a conference call. "We have been looking at the medical solutions market ever since 2011, 2012, as a very attractive opportunity for future growth."

BSN would have added more than 8 billion kronor to net sales last year on a pro forma basis, and about 1 billion kronor in adjusted operating profit, according to the Swedish maker of Tena incontinence pads. Completion of the transaction is subject to customary regulatory approvals, with closing expected in the second quarter of 2017, SCA said.

The world's largest maker of incontinence products is working to increase awareness of products that can alleviate problems with urine leakage, and Groth said both BSN and SCA have a "huge opportunity" to grow in emerging markets where the uptake of its products are low today. Most of the 30 million-euro benefit SCA expects from the combination is due to increased sales opportunities, Groth said.

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