UPM, Sappi form graphic paper joint venture
UPM, Sappi form graphic paper joint venture May 28 (Reuters) - Finnish forestry group UPM-Kymmene UPM.HE and South Africa-listed wood fibre group Sappi SAPJ.J signed a definitive agreement to form a graphic paper joint venture, UPM said on Thursday.
EU antitrust regulators warned in April that the proposed joint venture could reduce competition and raise prices, opening an investigation into the deal. The move will likely require the companies to offer concessions such as asset sales to address the competition concerns.
The 1.42 billion euro ($1.65 billion) deal combines the UPM Communication Papers business and Sappi's graphic paper business in Europe
UPM is set to get €475 million cash proceeds, €98 million in shareholder loans, while Sappi will get €90 million in cash and €10 million in shareholder loan
Both companies will hold a 50% stake in the joint venture
The parties have agreed that UPM has an option to sell to Sappi half of any outstanding preferential terms shareholder loan two years after closing
($1 = 0.8615 euros)
(Reporting by Vera Dvorakova and Elviira Luoma in Gdansk; Editing by Matt Scuffham)
((vera.dvorakova@thomsonreuters.com))