UPM and Sappi have signed a definitive agreement to create a 50/50 joint venture combining their European graphic paper operations, advancing plans first announced in late 2025 and marking a major step in the restructuring of Europe’s graphic paper sector.
The proposed joint venture will bring together UPM Communication Papers and Sappi’s European graphic paper business into an independent company responsible for its own operations, resources and strategic decisions. The transaction follows a non-binding letter of intent signed by the two companies in December 2025.
According to UPM President and CEO Massimo Reynaudo, the agreement represents an important milestone toward strengthening the long-term resilience of the European graphic paper industry while ensuring supply continuity for customers.
The companies estimate the joint venture could generate annual synergies of approximately €100 million through asset optimization, logistics improvements, sourcing efficiencies, product portfolio rationalization and operational enhancements.
UPM and Sappi have also secured financing arrangements for the new company, including €600 million in external financing and a €100 million revolving credit facility to support operational liquidity. Both facilities have been fully underwritten by Citi and Nordea.
The combined enterprise value of the businesses being contributed to the venture is estimated at €1.42 billion. UPM Communication Papers has been valued at €1.1 billion, while Sappi’s European graphic paper operations have been valued at €320 million.
UPM said the transaction is expected to improve its profitability margins, strengthen its balance sheet and further focus its portfolio on growth-oriented businesses. Following completion of the transaction, the company would no longer have direct sales exposure to the declining graphic paper markets of Europe and North America.
The joint venture is also intended to provide long-term strategic flexibility. After three years, either shareholder will have the option to initiate a divestment of its ownership stake, subject to agreed conditions.
The transaction remains subject to approval by Sappi shareholders as well as merger-control reviews by the European Commission and authorities in other jurisdictions, including the United States and China. Final approvals are expected by the end of 2026. Until then, UPM Communication Papers and Sappi’s European graphic paper business will continue to operate independently.
UPM is a Finland-based materials company specializing in renewable fibres, advanced materials, decarbonization solutions and communication papers. The company employs approximately 15,100 people worldwide and reported annual sales of €9.7 billion in 2025.
Sappi is a global producer of woodfibre-based materials headquartered in Johannesburg, South Africa. The company manufactures graphic papers, packaging and speciality papers, dissolving pulp, and biomaterials, serving customers in more than 150 countries. Sappi operates production facilities across Europe, North America and Southern Africa.
