UPM has signed a definitive agreement to form a graphic paper joint venture with Sappi. UPM and Sappi will contribute their respective businesses and assets to the joint venture with a combined enterprise value of EUR 1,420 million. The parties have secured EUR 600 million of external financing for the transaction as well as a revolving credit facility of EUR 100 million to finance the joint venture’s operational liquidity needs.
May 28, 2026
UPM has signed a definitive agreement to form a graphic paper joint venture with Sappi, and the parties have secured financing arrangements that will provide a robust financial standing for the joint venture.
Earlier, a non-binding letter of intent (LOI) on the transaction was signed on December 4, 2025. The planned joint venture will include the entire UPM Communication Papers business and Sappi’s graphic paper business in Europe. The joint venture will be owned 50/50 by UPM and Sappi. It will operate as an independent company, managing its own operations, resources, and decisions within agreed shareholder boundaries.
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“The definitive agreement is an important milestone in creating the planned Joint Venture that we see as a necessary step to secure long-term commitment and supply continuity for graphic paper customers in Europe and strengthen the resilience of the entire European graphic paper industry,” says Mr. Massimo Reynaudo, President and CEO of UPM.
Following this milestone, the parties will start planning to ensure operational readiness of the joint venture from day one. Until the closing of the intended Joint Venture, UPM Communication Papers and Sappi’s European graphic paper business will continue to operate as separate and independent companies.
The joint venture is expected to create annual synergies estimated at about EUR 100 million through asset and logistics optimizations, product portfolio rationalization, sourcing efficiency improvements and operational efficiencies.
The parties have secured EUR 600 million of external financing for the transaction as well as a committed revolving credit facility of EUR 100 million to finance the joint venture’s operational liquidity needs, both facilities fully underwritten by Citi and Nordea.
UPM and Sappi will contribute their respective businesses and assets to the joint venture with a combined enterprise value of EUR 1,420 million, excluding the value of expected synergy benefits.
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).
As consideration for its assets contributed to the planned joint venture, at closing UPM will receive cash proceeds of EUR 475 million, a receivable for a shareholder loan on preferential terms valued at EUR 88 million, a receivable for an additional shareholder loan valued at EUR 10 million and 50% of the equity of the Joint Venture equal to a book value of EUR 167 million. As part of the transferring business perimeter, EUR 411 million of net pension and other liabilities based on year-end 2025 balance sheet will transfer to the Joint Venture.
Sappi will receive cash proceeds of EUR 90 million, a receivable of a shareholder loan valued at EUR 10 million and 50% of the equity of the joint venture equal to a book value of EUR 167 million.
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The purchase prices, cash proceeds and financial impact of the transaction are estimated at the time of the definitive agreement, and subject to customary purchase price adjustments.
The joint venture will first repay its shareholder loans to its two shareholders and thereafter distribute dividends according to its financial performance and standing. The parties have agreed that UPM has an option to sell to Sappi half of any outstanding preferential terms shareholder loan two years after closing.
The establishment of the joint venture would create a sustainable standalone business that ultimately will provide divestment flexibility for both shareholders. Three years after closing, with the joint venture expected to have completed the integration and realized the synergies, either shareholder may initiate a divestment of their shareholdings.
