OWN CORRESPONDENT, Johannesburg | Friday
SAPPI, the pulp and paper giant denied rumours that that it might be the target of a takeover by Finland’s UPM Kymmene.
Robert Hope, Sappi’s strategic development director told a local newspaper that he was irritated by the takeover rumours, but did not comment further.
However the rumours have had a positive effect on Sappi’s share price which rose from R61.40 to R65 making it a rise of 14% over the last month.
Analysts have predicted that if UPM Kymmene and Sappi joined forces UPM would be pushed into the top three paper and board manufacturers in the world. Currently UPM is standing in the top five, while Sappi is ranked as the world’s largest coated fine paper producer.
In recent months UPM has been on the acquisition trail. It attempted to buy the New York listed paper group, Champion International, and has been looking around for other assets.
Another option for UPM is the Italian company, Burgo, but a local analyst said in a report that Sappi would be a better buy for the Finnish group as it was in line with UPM’s strategic goal of becoming a global forest products company. Sappi’s customer base was spread across the world, while Burgo only had interests in Europe where UPM was already established.
Sappi recently has been through a rationalisation programme, shedding non-core assets, and has also made several acquisitions.
Sappi is currently valued at US$5bn, representing US$22.34 per Sappi share, which an analyst said was about 26% less than what UPM was prepared to spend on acquiring Champion.
UPM market capitalisation last year was quoted at euro 10.7bn, with its shares quoted on the Helsinki and New York stock exchanges.