UPM Acquiring Myllykoski Corporation, Affiliated Company

The acquired company has paper mills in Germany, Finland and the United States.

December 23, 2010
Recycling Today Staff

UPM-Kymmene Corp. has entered into an agreement to acquire Myllykoski Corporation and Rhein Papier GmbH. Myllykoski has an enterprise value of around 900 million euros (US$1.177 billion).

Myllykoski Corp. consists of seven publication paper mills in Germany, Finland and the United States with a total annual paper production capacity of 2.8 million metric tons.

The transaction is expected to close during the second quarter of 2011.

Jussi Pesonen, UPM’s president and CEO, says UPM is focused on improving the cost efficiency and profitability of its European paper operations. "With this transaction, we create the conditions needed for improving UPM's cash flow and mid-term profitability.”

“Electronic media is posing a growing challenge for the print media. Print media has to be able to respond, not only with good content, but also with excellent cost competitiveness. UPM has confidence in the potential of the graphic industry. Our target is to be a competitive player that is able to meet customers' expectations.”

In an announcement on the proposed acquisition, Pesonen notes that profitability of the publication paper industry has been poor for almost ten years. Demand growth is shifting to markets outside of Europe, and the European industry is inefficient.

“Combining forces and rationalizing production is necessary for the future of the whole industry in Europe. This means both closing unprofitable production capacity and investments in order to increase cost efficiency,” says Pesonen.