Helsinki, 2010-12-21 07:00 CET (GLOBE NEWSWIRE) -- UPM-Kymmene Corporation Stock exchange release 21 December 2010 at 08:00
UPM-Kymmene Corporation has entered into an agreement to acquire Myllykoski Corporation and Rhein Papier GmbH ("Myllykoski"). The approximate enterprise value of the businesses acquired is EUR 900 million.
Myllykoski Corporation and Rhein Papier GmbH consist of seven publication paper mills in Germany, Finlandand the United States. The total annual paper production capacity is 2.8 million tonnes. In addition, Myllykoski Corporation owns 0.8% of the Finnish energy company Pohjolan Voima Oy, with an estimated value of EUR 70 million. Following the transaction, UPM Group's balance sheet assets will increase by approximately EUR 1.6 billion.
The transaction will be financed through a directed share issue of 5 million UPM shares, with current market value of approximately EUR 60 million, and long-term debt arrangements amounting to EUR 800 million.
The transaction is subject to customary closing conditions, including, among others, the approval of the regulatory authorities. Myllykoski will continue to operate independently until the transaction will be closed. The target is to close the transaction during the second quarter of 2011.
The transaction is estimated to create annual synergy benefits exceeding EUR 100 million mainly from 2012 onwards. Synergy benefits will be reached for the most part by rationalising production, logistics and sourcing as well as reducing overlapping activities. The related restructuring and investment costs of the combined operations are estimated to be approximately EUR 100-150 million.
The transaction is estimated to have an immediate positive impact on UPM's cash flow starting from the second half of 2011 and on earnings per share in 2012.
After the completion of the transaction, UPM’s gearing ratio is estimated to rise by 8 percentage points. At the end of September 2010, the gearing ratio was 51%. UPM will report from the transaction a one-off gain of approximately EUR 300 million.
UPM CEO: Combining forces is necessary
UPM's President and CEO Jussi Pesonensays that UPMis 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."
Pesonen draws attention to the challenging operating environment of print customers.
"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. UPMhas confidence in the potential of the graphic industry. Our target is to be a competitive player that is able to meet customers' expectations."
"Myllykoski is without doubt one of the leading publication paper suppliers. The company has broad-mindedly taken advantage of new business concepts and technologies. We recognise today’s Myllykoski people as solid professionals, who have a strongly customer oriented approach. This attitude and know-how fit very well with UPM."
Profitability of the publication paper industry has been poor for almost ten years already. Demand growth is shifting to markets outside of Europeand the European industry is inefficient.
"Combining forces and rationalising 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.
"Paper is one of UPM's core businesses and our target is undisputed cost leadership as well as growth in Chinaand other emerging markets. However, a balanced development of the different businesses within UPMis also in our interest. As a result of consolidation in the European paper business, we will also have better financial resources to implement our growth plans in our other businesses," says Jussi Pesonen.
* UPM will give further information on the transaction in a press conference and conference call today*
UPM's President & CEO Jussi Pesonen and CFO Tapio Korpeinen will present the transaction in a press conference held in Finnish at UPM Group Head Office in Helsinki, Eteläesplanadi 2, today on Tuesday, 21 December at 09:30 Finnish time.
Jussi Pesonen and Tapio Korpeinen will also present the transaction in a conference call and webcast for analysts and investors, held in English, today at 13:00 Finnish time (11:00 London time, 06:00 EST).
Conference call and webcast:
You can participate in the conference call either by dialling a number in the list below or following the webcast online at www.upm.com. Only participants who wish to ask questions in the conference call need to dial in. All participants can view the webcast presentation online.
We recommend that participants start dialling in 5-10 minutes beforehand to ensure the conference starts on time.
Conference ID: 884164
Phone numbers: Participant - North AmericaFreephone: +1 866 803 8344Participant - Australia LC: +61 (0)28 2239 540Participant - Hong Kong LC: +852 300 278 23Participant - Japan LC: +81 (3)45 8001 91Participant - Malaysia LC: +60 (0)37 7124 468Participant - New ZealandLC: +64 (0)99 1924 15Participant - SingaporeLC: +65 6823 2171Participant - South KoreaLC: +82 (0)23 4831 067Participant - Taiwan LC: +886 (0)22 1626 703Participant - India Freephone: 000 8001 0036 74Participant - India Freephone: 000 8001 0036 74Participant - Austria: +43 (0)268 2205 6293Participant - Belgium: +32 (0)2 290 14 11Participant - Czech Republic: +420 (2)3900 0636Participant - Denmark: +45 3271 4611Participant - France: +33 (0)1 7099 3212Participant - Germany: +49 (0)695 8999 0509Participant - Hungary: +36 (0)618 8932 17Participant - Ireland: +353 (0)1 4364 108Participant - Italy: +39 023 0350 9005Participant - Luxembourg: +352 2700 0734 18Participant - Netherlands: +31 (0)20 7965 012Participant - Norway: +47 (0)2 156 31 22Participant - Spain: +34 917 889 897Participant - Sweden: +46 (0)8 5052 0114Participant - Switzerland (GE): +41 (0)2 2592 7011Participant - Switzerland (ZH): +41 (0)434 5692 63Participant - UK: +44 (0)207 1620 177
The webcast can be replayed at www.upm.com for 12 months.
Notes to the editor
Myllykoski is a family-owned international paper group. It is one of the largest publication paper producers in the world. The company produces uncoated and coated publication papers, including newsprint.
Myllykoski and Rhein Papier operate altogether seven paper mills in total with an annual paper production capacity of 2.8 million tonnes. The mills are located in Albbruck, Ettringen, Hûrth and Plattling (two mills) in Germany, in Anjalankoski, Finland, and in Madison, the USA. Myllykoski employs approximately 2,600 people, of which 1,900 are based in Germany.
Myllykoski key figures
* Special items 2009 include a loss on sale of the Alsip mill and a gain on sale of the Utzenstorf mill. Special items 2010 include a gain on sale of a hydro power plant in Madison, USA.
UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our 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 23,000 people and it has production plants in 15 countries. In 2009, UPM's sales amounted to EUR 7.7 billion. UPM's shares are listed on the Helsinki stock exchange. UPM -The Biofore Company - www.upm.com
UPM-Kymmene CorporationPirkko HarrelaExecutive Vice President, Corporate Communications
UPM, Corporate CommunicationsMedia Desk, tel. +358 40 588 email@example.com
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