Sappi and UPM have announced the signing of a non-binding letter of intent to form a non-listed, independent 50/50 joint venture for graphic paper. The venture will combine Sappi’s European Graphic Paper business with UPM’s Communication Papers business in Europe, the UK and the US.
The companies say the transaction will be subject to the fulfilment of several regulatory and other conditions, including shareholder approval. The parties intend signing definitive agreements during the first half of calendar year 2026 and expect to close the proposed transaction by the end of calendar year 2026, once all conditions precedent are fulfilled.
Sappi and UPM state that the benefits of consolidating their graphic paper assets include strategically re-allocating production volumes to the most efficient paper machines, achieving more sustainable capacity utilization and stronger operational performance; the operational synergies created (anticipated to be at least €100 million per annum once the transaction is implemented), expected to provide greater value from the combined asset base, delivering enhanced profitability and stronger cash-flow generation; and reduced climate impact through enhancing operational efficiencies and continuing investment in decarbonisation, helping to advance the EU’s Clean Industrial Deal objectives.
The proposed transaction will be structured to enable the parties to contribute their respective businesses and assets to the newly formed joint venture, with Sappi and UPM as founding shareholders and each holding 50% of the issued shares. Sappi says its business is valued at €320 million. Sappi will transfer pension and other liabilities of €53 million and net assets valued at €267 million to the Joint Venture. In return Sappi will receive cash of €139 million and 50% shareholding in the joint venture.
The UPM business is valued at €1,100 million. UPM says it will transfer pension and other liabilities of €360 million and net assets of €740 million to the joint venture, receiving cash of €613 million and 50% shareholding in the joint venture in return.
The venture is said to have a combined enterprise value of €1,420 million excluding the value of the expected synergy benefits. At closing, the joint venture will raise debt to fund the purchase prices payable to Sappi and UPM respectively. The joint venture’s dividend policy will be to distribute all excess cash to its shareholders.
In September, Sappi Europe launched its Guard Pro OHS and Guard Pro OMH mono-material papers, said to be recyclable and deliver high-barrier protection without compromising production efficiency. Sappi says it offers strong protection against oxygen, water vapour, grease, and MOSH/MOAH.
The same month, UPM Specialty Papers and Royal Vassen partnered to create ‘recyclable and food-safe’ barrier paper solutions for various end-use applications, designed to address requirements including oxygen and moisture barrier properties. Royal Vassen’s Barryrwrap Everest barrier paper is designed for dry products requiring maximum protection and said to be ready to seal on existing production lines.
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