UPM and Sappi sign definitive agreement on graphic paper JV
- UPM and Sappi signed a definitive agreement to form a 50/50 graphic paper joint venture combining UPM Communication Papers and Sappi’s European graphic paper business.
- The JV secured €600m of external financing and a €100m committed revolving credit facility, both underwritten by Citi and Nordea.
- The contributed businesses have a combined enterprise value of €1,420m (UPM €1,100m; Sappi €320m) and the JV targets ~€100m annual synergies from asset, logistics and portfolio optimizations.
- Transaction is subject to shareholder and merger‑control approvals with final resolutions expected by end‑2026; UPM has a two‑year option on part of a preferential shareholder loan and shareholders may initiate divestment three years after closing.
Deal overview
UPM and Sappi signed a definitive agreement to form a 50/50 graphic paper joint venture combining UPM Communication Papers and Sappi’s European graphic paper business; the JV will operate as an independent company and the parties will prepare for operational readiness ahead of closing.
Financing and consideration
The JV secured €600m external financing plus a €100m committed revolving credit facility underwritten by Citi and Nordea; the contributed businesses have a combined enterprise value of €1,420m (UPM €1,100m; Sappi €320m). At closing UPM will receive €475m cash, shareholder loan receivables of €88m (preferential) and €10m, and 50% equity with a book value of €167m; Sappi will receive €90m cash, a €10m shareholder loan receivable and 50% equity (€167m); approximately €411m of net pension and other liabilities will transfer to the JV. Purchase prices are subject to customary adjustments.
Operational and financial impact
The JV targets ~€100m of annual synergies from asset and logistics optimizations, product‑portfolio rationalization, sourcing and operational efficiencies. The JV will first repay shareholder loans before paying dividends and, except for shareholder loans, future financing will be without recourse to the shareholders. UPM will account for its stake using the equity method and expects improved profitability margins, balance sheet metrics and a more focused business portfolio.
Regulatory timeline and conditions
The transaction requires Sappi shareholder approval and merger control clearances, including an EU Phase II review; final resolutions are expected by end‑2026. UPM has an option two years after closing to sell half of any outstanding preferential shareholder loan, and either shareholder may initiate divestment three years after closing.
Source: UPM