Analysts at Inderes believe that Finnish forestry giant UPM-Kymmene made a good choice in forming a joint venture in graphic paper with Sampi.
"We believe the arrangement makes strategic sense, as it reduces the company's dependence on a structurally declining paper market with weak prospects. A larger company also finds it easier to defend its efficiency in shrinking markets," Inderes writes.
However, Inderes points out that despite its role as market leader, UPM was unable to secure better terms. Analysts view the merger as "very equal."
The joint venture will not initially lead Inderes to adjust its estimates for UPM. The arrangement does not change analysts' view of the stock. The recommendation to reduce remains, with a target price of €24.
The companies announced the news yesterday. On the Helsinki Stock Exchange, there was a positive reaction to UPM's share, which rose around 3.6 percent and closed at EUR 24.48.
UPM-Kymmene Oyj is one of the world's leading paper producers. Net sales (including intragroup) break down by family of products as follows:
- papers (40.5%): magazine papers (worldwide No. 1 producer), fine and special paper (No. 1 in Europe; coated and glazed fine papers, packaging papers, letter-head paper, envelopes) and newspaper papers (No. 2 in Europe);
- pulp and timber products (30.1%): pulp, sawn timber and plywood;
- processed products (15.1%): adhesive labels, packaging (for the paper, steel and wood industries), silicon papers for the hygiene products, etc.;
- other (14.3%): primarily electricity production from renewable energy.
At the end of 2024, the group had 54 production plants worldwide.
Net sales are distributed geographically as follows: Finland (12.6%), Germany (10.4%), the United Kingdom (5%), France (3.7%), Poland (2.9%), Austria (1.1%), Europe (18.2%), the United States (17.4%), China (16.9%), Uruguay (1%) and other (10.8%).
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