Struggling Finnish paper maker M-real will sell its graphic papers business to Sappi for €750-million, the companies said on Monday.
The European paper industry has suffered for years from overcapacity which has kept a lid on prices, sparking speculation of looming consolidation, but M-real’s graphic paper business sale is the first larger deal in years.
”M-real will now become … a clearly more focused board and paper company with a strong core in high-quality packaging boards,” said Mikko Helander, chief executive of M-real.
”The transaction signed today shows our commitment to improving the operating environment of our industry as a whole.”
Sappi will pay €500-million euros in cash and assumed debt, 200-million in a vendor loan note and 50-million in new shares in Sappi.
M-real said the transaction will cut its annual sales by approximately one billion euros, while its net debt will fall to €630-million after the deal is closed.
The unit made a loss of €30-million in the first half of 2008.
The sale comprises the Kirkniemi and Kangas mills in Finland, the Stockstadt mill in Germany and the Biberist mill in Switzerland, with total capacity of 1,9-million tonnes.
M-real said it plans to stop production of standard coated fine paper at its Austrian Hallein and German Gohrsmuehle mills, cutting capacity by 600 000 tonnes. – Thomson Reuters