UPM-Kymmene completes acquisition of Repap
At closing, which is expected today, Repap says that each of its common shares will be converted into one special share of the amalgamated company, and all special shares will then be purchased by a wholly-owned subsidiary of UPM-Kymmene for CAD 0.20/share in cash. In addition, preferred shares of Repap will be acquired by the UPM-Kymmene subsidiary at closing for their redemption price of CAD 25.00/share in cash. The transaction values Repap's equity at approximately CAD 160 million (EUR 123 million), implying an enterprise value of approximately CAD 1.35 billion (EUR 1.04 billion).
Repap registered shareholders who have submitted properly completed letters of transmittal together with their share certificates to Montreal Trust Co. of Canada will receive their consideration by first class mail unless they have instructed Montreal Trust in their letters of transmittal to have their consideration held for pick-up. Montreal Trust is expected to mail such consideration to former Repap shareholders and have it made available for pick-up where applicable as soon as practicable following the closing. Repap shareholders whose shares are held in the name of a securities dealer, broker or other intermediary are advised to contact that entity for further information.
UPM-Kymmene says the acquisition strengthens its global leadership in magazine papers and is a logical step for the company to become a major local magazine paper producer in North America. The company adds that it continues to further develop a low cost production structure with state-of-the-art facilities. The Repap acquisition is expected to produce approximately CAD 50 million (EUR 38 million) in annual pre-tax synergies by 2002 through product and market mix optimization, cost savings in purchasing, logistics and selling, general and administrative expenses, as well as through improvements in best practices. The acquired mill will operate under the name UPM-Kymmene Miramichi.
UPM-Kymmene is one of the world's largest forest product companies and paper producers. The group's turnover in 1999 was EUR 8.3 billion (CAD 11.1 billion) and operating profit was EUR 1.6 billion (CAD 2.1 billion). The company's product range includes printing papers, converting materials, and wood products. Printing Papers, which comprise magazine papers, newsprint and fine papers, account for more than half of the group's turnover.
Following the closing of the Repap acquisition, UPM-Kymmene will be the world's largest producer of magazine papers and will rank among the world's top 10 producers of newsprint and fine papers. UPM Converting is among Europe's leading suppliers of converting materials. The group is also Europe's biggest plywood producer and one of the continent's largest producers of sawn timber.
UPM-Kymmene's operations are focused on European Union countries and the USA, where it owns Blandin Paper in Minnesota, producing LWC magazine papers. North American sales account for 11% of the group's turnover. The group has production plants in 13 countries and 170 sales and distribution companies spanning five continents.
Repap is a major producer of LWC magazine papers with a 9% share of total North American capacity. In 1999, the company's net sales totaled CAD 570 million (EUR 425 million) and operating profit was CAD 68 million (EUR 51 million). The company's paper is used in magazines, catalogs, inserts, and commercial printing applications. Its coated paper complex in New Brunswick, Canada, has two modern paper machines with a design capacity of 450,000 m.t./yr, a northern bleached softwood kraft pulp mill with an annual capacity of 235,000 m.t., and an integrated groundwood pulp mill with an annual capacity of 125,000 m.t.
Repap also has two sawmills with an annual capacity of 137,000 m3. The company employed 1,480 people at the end of 1999.
Edited by Ken Patrick
Managing Editor, Pulp and Paper Online
kpatrick@pulpandpaperonline.com