{"id":845524,"date":"2025-12-04T13:39:12","date_gmt":"2025-12-04T11:39:12","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=845524"},"modified":"2025-12-04T13:39:17","modified_gmt":"2025-12-04T11:39:17","slug":"south-african-company-partnering-with-european-giant-in-r28-billion-deal","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/845524\/south-african-company-partnering-with-european-giant-in-r28-billion-deal\/","title":{"rendered":"South African company partnering with European giant\u00a0in R28 billion deal"},"content":{"rendered":"\n

Sappi and Finland-based UPM-Kymmene Corporation plan to launch an independent\u00a050\/50 Joint Venture for graphic paper that combines their European and American operations.\u00a0<\/p>\n\n\n\n

The parties signed a non-binding letter of intent to form a non-listed, independent 50\/50 Joint Venture for graphic paper. <\/p>\n\n\n\n

It will bring together Sappi\u2019s European Graphic Paper business with UPM\u2019s Communication Papers business in Europe, the UK and the US. <\/p>\n\n\n\n

The move will be subject to the fulfilment of several regulatory and other conditions, including shareholder approval. <\/p>\n\n\n\n

The parties intend to sign definitive agreements during the first half of the 2026 calendar year. <\/p>\n\n\n\n

They also expect to close the proposed transaction by the end of the calendar year 2026, once all conditions precedent are fulfilled.<\/p>\n\n\n\n

The companies said that the joint venture represents a decisive response to the structural changes in the European graphic paper industry. <\/p>\n\n\n\n

It said that the move will strengthen its resilience and provide long-term commitment and supply security to customers. <\/p>\n\n\n\n

\u201cSappi is very excited by the potential that this joint venture, if approved, will bring,\u201d said Sappi CEO Steve Binnie. <\/p>\n\n\n\n

\u201cWe have been searching for a solution to secure a long-term, profitable future for our European business.\u201d <\/p>\n\n\n\n

Binne added that the partnership with UPM will deliver a focused business that brings the best assets and people of their combined businesses to create a strong future. <\/p>\n\n\n\n

\u201cThe proposed joint venture provides a unique opportunity to unlock value for our shareholders.\u201d <\/p>\n\n\n\n

\u201cThe transaction delivers on Sappi\u2019s Thrive strategy to reduce our direct exposure to the graphic paper segment and enables us to reposition our portfolio towards higher-growth, higher value segments.\u201d  <\/p>\n\n\n\n

Sappi said that its direct sales volume to the graphic paper segment will decrease to below 20% after the transactions are completed. <\/p>\n\n\n\n

The 50% shareholding in the joint venture is expected to generate more value than the standalone Sappi graphic paper business.<\/p>\n\n\n\n

\u201cUltimately, the transaction will enable Sappi to reduce debt in the medium term, and in the future, the cash dividends from the joint venture will further lower debt,\u201d added Binnie. <\/p>\n\n\n\n

How it will work <\/h2>\n\n\n
\n
\"\"<\/a>
 Sappi Limited CEO Steve Binnie and UPM President and CEO Massimo Reynaudo<\/figcaption><\/figure><\/div>\n\n\n

The new joint venture launch takes place against a backdrop of sustained structural decline in demand within the graphic paper market, as well as overcapacity and low asset utilisation. <\/p>\n\n\n\n

Sappi stated that this erosion has been caused by several factors, including shifts towards digital media, as print advertising revenues and newspaper and magazine circulations decline. <\/p>\n\n\n\n

This has only been made more challenging by the intensified rise in costs, especially energy costs in Europe.\u00a0<\/p>\n\n\n\n

 \u201cTo remain competitive and sustainable in the long term, consolidation is needed,\u201d said Marco Eikelenboom, CEO of Sappi Europe. <\/p>\n\n\n\n

\u201cConsolidation will contribute to a more robust and resilient European graphic paper industry, safeguarding security of domestic supply for the printing sector.\u201d<\/p>\n\n\n\n

The companies believe that the synergies created via the Joint Venture will be at least \u20ac100 million (R2 billion) per annum once the Transaction is implemented. <\/p>\n\n\n\n

As per the deal, Sappi will contribute the following assets: <\/p>\n\n\n\n

    \n
  • Gratkorn Mill (Austria); <\/li>\n\n\n\n
  • Ehingen Mill (Germany), <\/li>\n\n\n\n
  • Maastricht Mill (The Netherlands), <\/li>\n\n\n\n
  • Kirkniemi Mill (Finland) and<\/li>\n\n\n\n
  • Sappi Europe\u2019s wood supply Joint Ventures.<\/li>\n<\/ul>\n\n\n\n

    UPM will contribute their Communication Papers business assets, which are located at the following UPM mills: <\/p>\n\n\n\n

      \n
    • Augsburg (Germany), <\/li>\n\n\n\n
    • Schongau (Germany), <\/li>\n\n\n\n
    • Nordland paper lines 1 and 4  (Germany),  <\/li>\n\n\n\n
    • Rauma, including UPM RaumaCell (Finland), <\/li>\n\n\n\n
    • Kymi (Finland),<\/li>\n\n\n\n
    • J\u00e4ms\u00e4nkoski paper line 6 (Finland), <\/li>\n\n\n\n
    • Caledonian (United Kingdom), and <\/li>\n\n\n\n
    • Blandin (United States of America).<\/li>\n<\/ul>\n\n\n\n

      Sappi and UPM will sell their respective businesses and assets to the newly formed Joint Venture, with a combined enterprise value of \u20ac1,420 million (around R28 billion at current rates).\u00a0<\/p>\n\n\n\n

      The Joint Venture will then raise debt to fund the purchase prices payable to Sappi and UPM, respectively. The Joint Venture\u2019s dividend policy will be to distribute all excess cash. <\/p>\n","protected":false},"excerpt":{"rendered":"

      Sappi is working on a joint venture with Helsinki-headquartered UPM amid serious struggles for the graphic paper industry. <\/p>\n","protected":false},"author":95,"featured_media":845527,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[13634,24324],"class_list":["post-845524","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-sappi","tag-upm-kymmene-corporation"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845524","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=845524"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845524\/revisions"}],"predecessor-version":[{"id":845549,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845524\/revisions\/845549"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/845527"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=845524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=845524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=845524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}