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UPM Completes Acquisition of Myllykoski

Helsinki, Finland, 01 August 2011 -- (GLOBE NEWSWIRE) -- UPM has completed the acquisition of Myllykoski Oyj and Rhein Papier GmbH. The EU Commission approved the acquisition on 13 July 2011.

Myllykoski Oyj and Rhein Papier GmbH consist of seven publication paper mills in Germany, Finland, and the United States. Their total annual paper production capacity is 2.8 million metric tons. The transaction also includes Myllykoski Oyj’s 0.8 % stake in the Finnish energy company Pohjolan Voima Oy.

The enterprise value of all the businesses acquired is approximately EUR 900 million. UPM will report a one-off gain of approximately EUR 40 million in the third quarter. UPM estimates that the transaction will have an immediate positive effect on cash flow and a positive effect on earnings per share from 2012. UPM has announced a preliminary estimate of annual cost synergies in excess of EUR 100 million.

For the financing of the acquisition, UPM will issue 5 million new UPM shares to the direct and indirect owners of Myllykoski Oyj and Rhein Papier GmbH and has drawn EUR 800 million in long-term debt.

UPM will publish pro forma financial information on the transaction for the first half of the year in its interim report, to be issued on 03 August 2011.

”UPM has been very determined in implementing its long-term strategy of being the cost leader in the European paper industry and the global leader in magazine papers. Consolidation and restructuring are the best way to make fundamental improvements in terms of cost efficiency and to create value in the paper business. Our position as a frontrunner in the industry enables us to make a step change in the profitability of our Paper Business,” said Jussi Pesonen, UPM’s president and CEO.

“UPM and Myllykoski have been working together since the beginning of the year in order to prepare an integration plan. The cooperation and the initial planning have been very professional and progressed in a good spirit. During this process, the merits of the transaction have been confirmed,” Pesonen said.

“The planning work to identify cost synergies is still ongoing. As the transaction is now completed, we have access to detailed information on Myllykoski operations and business units and we can verify the various options. The planning is proceeding towards announcement as soon as possible, however, latest by mid-September,” said Jyrki Ovaska, president of UPM’s Paper Business Group.

“UPM has strong confidence in the print industry and our target is to be a very competitive paper supplier. After the transaction, we will be better able to meet customers' needs with an extended product portfolio and strong local presence, including also in North America. Paper is one of UPM's core businesses and our target is to achieve undisputed cost leadership in Europe. We also want to grow in China and other emerging markets,” Ovaska said.


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