What is UPM up to?

UPM-Kymmene (OMXH: UPM1V) in negotiations to sell UPM Stracel paper mill in Strasbourg, France. A joint venture of VPK Packaging Group NV (Euronext: VPKB) and family-owned Klingele Papierwerke is on the other side of the table and they have made an offer subject to finalization of a bank review. The mill which was founded in 1937 and acquired by UPM in 1988 has been producing matt, book paper and other publication papers. VPK and Klingele plan to convert the Stracel mill into a recycled fibre-based containerboard unit producing fluting and test-liner. The new mill would create some 140 jobs, which is about half of the current personnel. The transaction is also subject to completion of employee information and consultation process. UPM would retain some piece of land for potential future advanced biofuels production

Last Friday UPM said it had concluded co-determination negotiations and decided to restructure sawn timber and further processing operations in Finland when it renews its business strategy. UPM and Pölkky Oy signed a contract for intended sale of sawn timber operations in Kajaani, with the entire Kajaani sawmill personnel continuing to work for Pölkky Oy. UPM will stop production at Aureskoski and Heinola further processing mills by the end of 2012, resulting in permanent layoffs of 97mill employees. Common sales and management staff functions are also reorganized leading to a few dozen lost jobs in Lahti.

Within the last week, UPM has also communicated the redeeming of the Myllykoski power plant from Vamy Oy and the closure of Pietarsaari and Tervasaari mills to Billerud was completed a few weeks before that. All of these happenings have made investors wonder what bold President & CEO Jussi Pesonen and the fast moving Chairman Björn Walhroos are plotting. Newspaper Arvopaperi said that a large international bank has featured UPM as a potential spin-off candidate, with its energy business potentially having a lot of hidden value.