UPM-Kymmene Corporation and Sappi Limited have signed a non-binding letter of intent to create a graphic paper joint venture combining UPM’s Communication Papers business and Sappi’s European graphic paper operations, according to UPM-Kymmene Corporation.
The joint venture would be owned equally by UPM and Sappi and operate as an independent company managing its operations and assets within agreed shareholder boundaries. It would include eight UPM paper mills in Finland, Germany, the UK and the USA, and four Sappi mills in Finland, Germany, Austria and the Netherlands.
The total enterprise value of the combined businesses is Euro 1,420 million, excluding expected synergy benefits. UPM Communication Papers is valued at Euro 1,100 million and Sappi’s European business at Euro 320 million. The joint venture is expected to generate annual synergies of about Euro 100 million through asset optimization, product portfolio rationalization, logistics optimization, sourcing efficiency and operational improvements.
At closing, the joint venture would raise debt to fund the purchase prices. UPM would receive Euro 613 million in cash and a 50% shareholding, while Sappi would receive Euro 139 million in cash and a 50% shareholding. UPM would also transfer Euro 406 million of pension liabilities to the new company.
The valuation of UPM Communication Papers equals a multiple of 4.6 times its EBITDA for the last reported 12 months (Q4 2024–Q3 2025). The assets represent less than 10% of UPM’s total assets and would be accounted for under the equity method.
For 2024, UPM Communication Papers reported sales of Euro 2,953 million, comparable EBITDA of Euro 344 million, operating profit of Euro 190 million, capital employed of Euro 1,125 million and a comparable return on capital employed (ROCE) of 23.8%. For Q4 2024–Q3 2025, the business reported sales of Euro 2,602 million, comparable EBITDA of Euro 241 million, operating profit of Euro 30 million, capital employed of Euro 986 million and ROCE of 16.9%.
UPM Group’s total sales in 2024 were Euro 10,339 million, with comparable EBITDA of Euro 1,734 million and operating profit of Euro 604 million. Excluding the Communication Papers division, UPM’s sales were Euro 7,902 million, comparable EBITDA Euro 1,390 million and operating profit Euro 414 million.
UPM Communication Papers has a climate roadmap targeting a 70% reduction in product emissions by 2030. The joint venture would continue this decarbonization plan, optimizing capacity utilization and efficiency to support the EU’s Clean Industrial Deal objectives.
The transaction would create a more efficient and sustainable business structure while maintaining supply security for customers. It would also establish a platform allowing both shareholders divestment flexibility three years after closing, following integration and realization of synergies.
Negotiations on definitive agreements are ongoing. Signing is expected in the first half of 2026, with closing anticipated by the end of 2026, subject to merger control, financing, shareholder approvals, and other customary conditions. The transaction is non-binding and subject to possible adjustments.
