UPM has signed a definitive agreement with Sappi to establish a joint venture for graphic paper operations in Europe, following a non-binding letter of intent signed in December 2025.
The planned venture will combine UPM Communication Papers and Sappi’s European graphic paper business into a new independent company, jointly owned by the two firms on a 50/50 basis. The business will manage its own operations and resources within agreed shareholder boundaries.
“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,” said Massimo Reynaudo, president and CEO of UPM.
The companies said they have secured €600 million (£508 million) in external financing for the transaction, alongside a €100 million (£85 million) revolving credit facility to support the venture’s operational liquidity needs.
The joint venture is expected to generate around €100 million (£85 million) in annual synergies through operational efficiencies, logistics and asset optimisation, sourcing improvements, and portfolio rationalisation.
Under the agreement, UPM and Sappi will contribute businesses with a combined enterprise value of €1.42 billion (£1.20 billion), excluding expected synergies. UPM’s business is valued at €1.1 billion (£932 million), while Sappi’s European graphic paper business is valued at €320 million (£271 million).
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
