UPM completed acquisition of Myllykoski

Aug 02, 2011. /Lesprom Network/. UPM has completed the acquisition of Myllykoski Oyj and Rhein Papier GmbH ("Myllykoski"). The EU Commission approved the acquisition on 13 July 2011, as the company said in a press release received by Lesprom Network. Myllykoski Oyj and Rhein Papier GmbH consist of seven publication paper mills in Germany, Finland and the United States. Their total annual paper production capacity is 2.8 million tonnes. The transaction also includes Myllykoski Oyj’s 0.8 % stake in the Finnish energy company Pohjolan Voima Oy. The enterprise value of all the businesses acquired is approximately Euro 900 million. UPM will report a one-off gain of approximately Euro 40 million in the 3Q. UPM estimates that the transaction will have an immediate positive impact on cash flow and a positive impact on earnings per share from 2012. UPM has announced a preliminary estimate of annual cost synergies in excess of Euro 100 million. For the financing of the acquisition, UPM will issue 5 million new UPM shares to the direct and indirect owners of Myllykoski Oyj and Rhein Papier GmbH and has drawn Euro 800 million in long term debt. "UPM has been very determined in implementing its long term strategy of being the cost leader in the European paper industry and the global leader in magazine papers. Consolidation and restructuring are the best way to make fundamental improvements in terms of cost efficiency and to create value in the paper business. Our position as a frontrunner in the industry enables us to make a step change in the profitability of our Paper Business”, says UPM’s President and CEO Jussi Pesonen. “The planning work to identify cost synergies is still ongoing. As the transaction is now completed, we have access to detailed information on Myllykoski operations and business units and we can verify the various options. The planning is proceeding towards announcement as soon as possible, however, latest by mid-September,” says Jyrki Ovaska, President of UPM’s Paper Business Group. “UPM has strong confidence in the print industry and our target is to be a very competitive paper supplier. After the transaction, we will be better able to meet customers' needs with an extended product portfolio and strong local presence, including also in North America. Paper is one of UPM's core businesses and our target is to achieve undisputed cost leadership in Europe. We also want to grow in China and other emerging markets,” says Ovaska. UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 24,500 people and it has production plants in 16 countries.