Paper and material specialists, UPM-Kymmene and Sappi, have announced that the two companies have signed a non-binding letter of intent to create what they call “the Joint Venture”, in response to structural changes in the European graphic paper industry. UPM and Sappi say the graphic paper venture would operate as an independent company which would be managed internally with resources and decisions agreed within shareholders boundaries. The Joint Venture has been adopted in order to “rationalise” supply in what UPM calls an industry “burdened by declining demand” as well as structural overcapacity, and high energy costs. Marco Eikelenboom, chief executive officer of Sappi Europe, comments: “To remain competitive and sustainable in the long term, consolidation is needed. Consolidation will contribute to a more robust and resilient European graphic paper industry, safeguarding security of domestic supply for the printing sector.” The venture is speculated to create annual synergies of about €100m (£87.4m) through asset optimisation, portfolio rationalisation, logistics optimisations, as well as sourcing operational and efficiency improvements. Sappi cites the reason for the venture as the “erosion” of the graphic paper market alongside overcapacity and low utilisation rates of assets. The rising costs of energy in Europe, recent trade tensions, and tariffs have all been cited as causing disruption to trade flows and resulted in increased Asian exports to the European Union (EU). The new Joint Venture, which is seen as a way of creating a more “efficient, adaptable, and sustainable graphic paper business", will include the entire UPM Communication Papers business as well as Sappi’s graphic paper business in Europe. The Joint Venture will be owned equally by the two companies with a 50/50 split. The planned perimeter of the venture includes eight of UPM’s paper mills in Finland, Germany, UK, and the USA. Sappi would contribute four mills throughout Finland, Germany, Austria, and the Netherlands. Based on the letter of intent, UPM and Sappi’s contributions would equate to a combined enterprise value of €1,420m (£1,196m), excluding the value of expected synergy benefits. The enterprise value of UPM Communication Papers is €1,100m (£961.6m) while Sappi Europe is valued at €320m (£279.7m). UPM would receive cash proceeds of €613m (£535.9m) and 50% shareholding in the Joint Venture, while Sappi would receive cash proceeds of €139m (£121.5m) and 50% shareholding in the venture. After the closing of the transaction, the Joint Venture is expected to raise debt to fund the purchase prices payable to both companies leading to independent finance by the venture, meaning it will be able to secure additional funding in the future without any recourse to the shareholders. Negotiations regarding the details of the deal are apparently ongoing, with definitive agreements expected to be signed during the first half of 2026. The proposed transaction is subject to review by the European Commission and relevant authorities in the US, UK, and China. BUSINESS | NEWS UPM and Sappi to join forces By David Osgar [Pictured] Marco Eikelenboom, chief executive officer of Sappi Europe 8 website: www.printmonthly.co.uk January | February 2026 - Issue 358 printmonthly PrintMonthlyMagazine printmonthly_signlink Sappi’s Gratkorn Mill in Austria produces its Magno range of coated papers
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