Sappi and UPM move forward with major graphic paper joint venture
Sappi and UPM-Kymmene Corporation have signed definitive agreements to establish a proposed 50/50 joint venture that would combine significant graphic paper operations across Europe, the United Kingdom and the United States. The planned non-listed joint venture will merge Sappi’s European Graphic Paper business with UPM’s Communication Papers business, creating one of the largest players in the global graphic paper sector.
The transaction is intended to strengthen the long-term competitiveness and resilience of the European graphic paper industry at a time when demand for publication and communication papers continues to decline due to digitalisation and changing market dynamics.
Sappi will contribute the following mills and assets to the new entity: Gratkorn in Austria, Ehingen in Germany, Maastricht in the Netherlands and Kirkniemi in Finland.
UPM will contribute its Communication Papers operations at Augsburg, Schongau and Nordland in Germany; Rauma, Kymi and Jämsänkoski in Finland; Caledonian in the United Kingdom; and Blandin in the United States.
The companies confirmed that the joint venture will operate as an independent company with its own management, operations and decision-making structure within agreed shareholder boundaries.
“The definitive agreement is an important milestone in creating the planned Joint Venture that we see as a necessary step to secure long-term commitment and supply continuity for graphic paper customers in Europe and strengthen the resilience of the entire European graphic paper industry,” said Massimo Reynaudo, President and CEO of UPM.
Steve Binnie, CEO of Sappi Limited, also underlined the strategic importance of the project for the future of Sappi’s European business. “Sappi is very excited by the potential that this joint venture, if approved, will bring. We have been searching for a solution to secure a long-term profitable future for our European business. This innovative partnership with UPM will deliver a focused business bringing the best assets and people together to create a strong future which can ensure sustained support for our customers and can also ensure that the European manufacturing base is protected,” Binnie stated.
The planned joint venture is expected to generate annual synergies of approximately EUR 100 million through asset optimisation, logistics improvements, sourcing efficiencies, operational synergies and product portfolio rationalisation.
UPM and Sappi also confirmed that financing arrangements for the new company have already been secured. The parties obtained EUR 600 million in external financing together with a EUR 100 million revolving credit facility to support the joint venture’s operational liquidity requirements.
The combined enterprise value of the businesses being contributed to the joint venture is estimated at approximately EUR 1.42 billion, excluding expected synergies. According to UPM, its Communication Papers business has been valued at EUR 1.1 billion, while Sappi’s European graphic paper operations have been valued at EUR 320 million.
The transaction remains subject to regulatory approvals, including merger control clearances from the European Commission and authorities in other jurisdictions such as the United States and China, as well as shareholder approval from Sappi shareholders. Final approvals are expected by the end of 2026. Until the transaction is completed, both companies confirmed that their respective graphic paper businesses will continue to operate independently.
