UPM Completes Myllykoski Acquisition
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UPM, Helsinki, Finland, this week reported that it has completed the acquisition of Myllykoski Oyj of Finland and Rhein Papier GmbH (Myllykoski) in Germany. The acquisitions consist of seven publication paper mills in Germany, Finland, and the U.S. 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 impact on cash flow and a positive impact 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 five 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 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," says UPM's President and CEO Jussi Pesonen.
Jyrki Ovaska, president of UPM's Paper Business Group, added that "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."
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