UPM and Sappi have signed a definitive agreement on the graphic paper Joint Venture
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. A non-binding letter of intent (LOI) on the transaction was signed on December 4, 2025.
Sappi Limited (“Sappi”) and UPM-Kymmene Corporation (“UPM”) have today announced the signing of binding (definitive) agreements to form a non-listed, independent 50/50 Joint Venture for graphic paper. This Joint Venture proposes to bring together Sappi’s European Graphic Paper business with UPM’s Communication Papers business in Europe, the UK and the US.
Sappi will contribute the following assets: Gratkorn Mill (Austria); Ehingen Mill (Germany), Maastricht Mill (The Netherlands), and Kirkniemi Mill (Finland).
UPM will contribute their Communication Papers business assets which are located at the following UPM mills: Augsburg (Germany), Schongau (Germany), Nordland paper lines 1 and 4 (Germany), Rauma including UPM RaumaCell (Finland), Kymi – excluding pulp mill
(Finland), Jämsänkoski paper line 6 (Finland), Caledonian (United Kingdom), and Blandin (United States of America).
The transaction remains subject to the fulfilment of a number of regulatory and other conditions, including shareholder approval. The parties expect final resolutions by the end of 2026. The Joint Venture would become operational upon closing.
“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 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 according to the satisfaction of all legal and regulatory requirements, 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 €100 million through asset and logistics optimizations, product portfolio rationalization, sourcing efficiency improvements and operational efficiencies.
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.
Steve Binnie, Sappi Limited CEO, stated, “Sappi is very excited by the potential that this joint venture, if approved, will bring. We have been searching for a solution to secure a long-term profitable future for our European business. This innovative partnership with UPM will deliver a focused business bringing the best assets and people together to create a strong future which can ensure sustained support for our customers and can also ensure that the European manufacturing base is protected.”
Transaction subject to merger control and other conditions
The transaction requires among other conditions approval by Sappi Limited’s shareholders and is also subject to merger control approval by the European Commission and authorities in other jurisdictions such as the US and China, with final resolutions expected by the end of 2026. The Joint Venture would become operational upon closing. As announced on April 28, 2026, the review of the Joint Venture proceeded to Phase II of EU merger control. UPM continues to engage openly and constructively with the European Commission during the second part of the process.
UPM is a material solutions company, renewing products and entire value chains with an extensive portfolio of renewable fibres, advanced materials, decarbonization solutions, and communication papers.
Sappi uses renewable resources to make woodfibre based products. They are a diversified, innovative and trusted leader focused on sustainable processes and products, and are building a circular economy that benefits the world. Sappi’s packaging papers, graphic papers, pulp and biomaterials are manufactured from woodfibre sourced from sustainably managed forests, in production facilities which, in many cases use internally generated bioenergy.
Source: UPM/Sappi
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