The paper merger of UPM and Sappi in Europe is progressing, with the agreement including financing now signed. Regulatory approvals are pending.
A divestment was also mentioned, occurring in 3 years at the earliest.
According to the definitive agreement:
- UPM and Sappi will invest their mentioned businesses and assets into a joint venture with an enterprise value of EUR 1,420 million, which does not include the value of the aforementioned synergies. The UPM Communication Papers business is valued at EUR 1,100 million (enterprise value). Sappi’s European business is valued at EUR 320 million (enterprise value).
- Upon completion of the transaction, UPM will receive a cash payment of EUR 475 million, a EUR 88 million receivable from a senior shareholder loan, a EUR 10 million receivable from another shareholder loan, and a 50 percent ownership stake in the joint venture, corresponding to a book value of EUR 167 million. As part of the transferred business entity, EUR 411 million in net pension liabilities and other debts (based on the balance sheet at the end of 2025) will be transferred from UPM to the joint venture.
- Sappi will receive a cash payment of EUR 90 million, a EUR 10 million receivable from a shareholder loan, and a 50 percent ownership stake in the joint venture, corresponding to a book value of EUR 167 million.
The establishment of the joint venture would create a sustainable independent business, which in the future would provide both shareholders with an opportunity for divestment. Three years after the completion of the arrangement, when the joint venture is expected to have completed integration and achieved synergies, either shareholder may exit their ownership in the joint venture.