Sappi, UPM announce major joint venture to reshape Europe’s graphic paper industry

EUROPE — Sappi Limited and UPM-Kymmene Corporation have signed a non-binding letter of intent to form a 50/50 joint venture that will combine their European graphic and communication paper operations.

The agreement spans assets in Europe, the UK and the United States, and is expected to close by the end of 2026 pending regulatory approvals and shareholder consent.

The companies plan to finalise binding agreements during the first half of 2026.

In a joint statement, Steve Binnie, CEO of Sappi Limited, and Massimo Reynaudo, President and CEO of UPM, said the venture represents a “decisive response to the structural changes in the European graphic paper industry,” offering improved resilience, stronger competitiveness and long-term supply security.

Binnie added that the new entity would bring together “the best assets and people to create a strong future for customers while protecting the European manufacturing base.”

The move also aligns with Sappi’s Thrive strategy to reduce its exposure to the declining graphic paper segment, with its direct sales volume expected to fall below 20% once the deal is completed.

A response to declining demand and overcapacity

The joint venture addresses several long-standing pressures facing the graphic paper industry, including persistent structural decline driven by digitalization, reduced print advertising, shrinking newspaper and magazine readership, and the widespread adoption of digital workflows.

These shifts have led to chronic overcapacity and lower utilization rates across the sector.

Marco Eikelenboom, CEO of Sappi Europe, said consolidation is essential for long-term sustainability.

“Consolidation will contribute to a more robust and resilient European graphic paper industry, safeguarding security of domestic supply for the printing sector,” he said.

The integrated company will optimize production by reallocating volumes to the most efficient paper machines, improving operational performance and ensuring more sustainable capacity utilization.

The companies expect operational synergies of at least €100 million per year once fully implemented.

A combined enterprise value of US$1.61B

Under the agreement, both companies will sell their businesses into the new joint venture, which carries a combined enterprise value of €1.42 billion (US$1.65bn), excluding synergies.

Sappi’s assets are valued at €320 million (US$372.88m), based on FY2025 EBITDA of €64 million (US$74.58m) – 5× multiple.

UPM’s assets are valued at €1.1 billion (US$1.28bn), reflecting a 4.6× multiple on the last 12 months’ EBITDA to September 2025.

Sappi will contribute its Gratkorn (Austria), Ehingen (Germany), Maastricht (Netherlands), Kirkniemi (Finland) mills, along with Sappi Europe’s wood supply joint ventures.UPM will contribute assets from its Augsburg, Schongau, Nordland, Rauma, Kymi, Jämsänkoski, Caledonian (UK) and Blandin (US) operations.

If approved, the venture will form one of the largest graphic paper businesses globally, signaling a major consolidation effort aimed at stabilizing and future-proofing Europe’s printing and publishing supply chain.

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