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UPM Sells its Packaging Paper Production Lines to Billerud

Helsinki, Finland, 01 February 2012 -- UPM is selling its packaging paper production lines to the Swedish packaging paper company Billerud. The transaction includes two packaging paper machines; one in Pietarsaari and one in Tervasaari, Finland. The enterprise value of the transaction is EUR 130 million. The transaction is subject to regulatory approval. The target is to close the transaction during the second quarter of 2012.

The mills’ real estate and key infrastructure in both locations will stay in UPM’s ownership. As part of the transaction, the parties have agreed on long-term market-based raw-material and services supply agreements on the mill sites. The personnel of the packaging paper business will transfer to Billerud.

“UPM considers continuing consolidation to be critical to the cost competitiveness of the whole industry. With this transaction, UPM and Billerud will have an improved opportunity to develop businesses that are at the center of each company’s strategy. Billerud is a solid and successful player in the packaging paper business, whereas UPM is increasingly focusing on graphic papers and selected speciality papers. These speciality papers comprise postal papers, which are part of our graphic paper offering, and label papers, which are synergistic to our Label Materials business,” said Jyrki Ovaska, president of UPM’s Paper Business Group.

“The negotiations with Billerud have proceeded well and we have a shared view on how to make things work. We have every reason to believe that the cooperation within the mill sites will be successful,” Ovaska said.

The production capacity of the sold business is approximately 300,000 metric tons of packaging papers. PM 7 in Tervasaari produces kraft papers and PM 1 in Pietarsaari produces kraft and sack papers.

The turnover of the business involved in the transaction is approximately EUR 220 million and the pro forma EBITDA (excluding overhead and administration expenses) is EUR 18 million (2011A). The number of personnel transferring to Billerud is approximately 185. UPM estimates to report a one-off gain from the transaction in excess of EUR 50 million.

UPM continues pulp production at its mill in Pietarsaari, and paper production at Tervasaari’s two label paper machines.

UPM's products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 24,000 people and it has production plants in 16 countries. UPM's annual sales exceed EUR 10 billion. UPM's shares are listed on the Helsinki stock exchange. Additional information is available at www.upm.com.


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