The firm gave no indication of where the redundancies would be, but James McNaughton chief executive Ian George previously said: "Where there is a MoDo and a McNaughton's branch in the same town, there will only be one."

There is branch duplication in Bristol, Birmingham, Cardiff, Glasgow and Leeds half of Modo Merchants' 10 sites.

MoDo Merchants currently employs 190 staff and has a turnover of 55m. James McNaughton has a turnover of 200m, with 40 sales offices and 623 employees.

The UK restructuring initiative is part of the parent company M-real's 141m savings and efficiency programme, announced in February last year.

A further restructuring at M-real's Zanders mills of Gohrsmhle and Reflex in Germany has also been announced.

The Finnish paper manufacturer has estimated that both moves will improve the company's profitability in 2004 by 21m.

Around 330 jobs will be cut from the 1,800 staff across both mills by the end of 2006.

Story by Andy Scott