European Commission Expects to Approve Merger

 

The European Commission is set to approve the $3.27 billion acquisition by Finland's UPM-Kymmene of its German rival Haindl, creating the world's largest maker of paper for newspapers and magazines.

A formal announcement is expected in the next two weeks, but the Commission's competition department is understood to have decided to clear the takeover after five months of scrutiny.

The Brussels authorities were concerned that UPM-Kymmene's takeover of family owned Haindl could have harmed competition in the European market, which is dominated by a handful of Nordic companies.

The commission said the transaction could have created an oligopoly that would have enabled companies to agree price rises and capacity cuts.

The companies also agreed to sell two of Haindl's six paper mills to their Norwegian rivals Norske Skog for E1.1bn to reduce their share of the market.

After the deal, UPM will have a 26 percent share of the European market for magazine paper and a 20 percent share of the newsprint market.