Sappi snaps up M-real paper mills

M-real sells its graphic papers business area to Sappi for EUR 750 million in an effort to clear its debts.

The sale comprises the Kirkniemi and Kangas mills in Finland, the Stockstadt mill in Germany and the Biberist mill in Switzerland, with a total capacity of 1.9 million tonnes. As part of the transaction, M-real and Sappi have also entered into a long-term agreement on the supply of pulp and BCTMP and other smaller services and supplies.

Of the graphic papers business area's units, the paper mills in Hallein, Gohrsmühle, Reflex and Äänekoski as well as the Husum mill's paper machine 8 will remain in M-real's ownership.

"We have taken a major step in our strategic review," said Kari Jordan, chairman of the M-real board of directors.

"The transaction will significantly improve M-real's future prospects and is the first major step in the European paper industry consolidation in the 21st century."

In Australia, Sappi stock is sold through CPI and Doggets while M-real goes through Paper Agencies.

According to Mikko Helander, CEO of M-real, the sale is a chance for the company to become more profitable. "The completion of this transaction will reduce our debt level and further improve our financial situation," he said.

The sale is expected to be complete during the first quarter of 2009.