EU commission unconditionally approves UPM Kymmene's (OMX: UPM1V) Myllykoski and Rhein Papier GmbH deal discussed in detail in 21.12.2010 blog item. Competitors Stora Enso (OMX: STERV) Holmen (OMX: HOLM B) Svenska Cellulosa Aktiebolaget (SCA) (OMX: SCA B), M-Real (OMXH: MRLAV, OMXH: MRLBV) and Norske Skog (OSE: NSG) are also up strongly on the news.
EU commission conducted an in-depth investigation and concluded that the combined entity will face enough competition so as to that consumers are not hurt. Competitors also have significant spare capacity left. Nevertheless some of the excess capacity in the field may now be cut by UPM. Analysts had been suggesting to buy European pulp & paper sector companies ahead of the approval as it was speculated that a ruling would be positive.
Combined Myllykoski and Rhein Papier have even paper mills with annual capacity of around 2.8 million tonnes. Myllykoski is a family business with long traditions. The owners have been rueing post initial announcement that situation had to come to this and now the most likely cuts should be from its assets. Rhein Papier has a couple of prime assets. UPM has now cleared all regulatory hurdles and expects final closing of the 900 million Euro per enterprise value deal within a month. UPM Kymmene's release is available here.
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