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UPM: Selling packaging paper production to Billerud02.01.2012
UPM sells its packaging paper production 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 this year. 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 as old employees.
The production capacity of the sold business is approximately 300,000 t 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 modern pulp mill in Pietarsaari, and paper production at Tervasaari’s two label paper machines.