The European Commission has issued a Statement of Objections over the planned graphic paper joint venture between UPM and Sappi, marking an important stage in the regulatory review of a transaction that would combine a substantial portfolio of European graphic paper production assets.

UPM confirmed the development on August 26, saying the Statement of Objections sets out the Commission’s preliminary concerns arising from its in-depth merger investigation. The company emphasized that the document does not represent a final decision on the transaction.

UPM and Sappi are reviewing the Commission’s objections and plan to respond as the merger-control process continues.

Joint Venture Would Combine Major Graphic Paper Operations

UPM and Sappi signed the definitive agreement for the transaction on May 28, 2026, following a non-binding letter of intent announced in December 2025.

Under the agreement, the new graphic paper company would be owned 50/50 by UPM and Sappi and operate independently.

UPM would contribute its entire Communication Papers business, including assets at:

• Augsburg, Schongau and selected Nordland paper lines in Germany
• Rauma, Kymi and Jämsänkoski PM6 in Finland
• Caledonian in the United Kingdom
• Blandin in the United States

Sappi would contribute its European graphic paper operations at Gratkorn in Austria, Ehingen in Germany, Maastricht in the Netherlands and Kirkniemi in Finland.

The businesses and assets to be contributed have a combined agreed enterprise value of approximately €1.42 billion, excluding expected synergies.

Commission’s Objections Add Regulatory Uncertainty

A Statement of Objections is a formal step through which the European Commission communicates preliminary competition concerns identified during an investigation.

For the UPM-Sappi transaction, the development means the companies will now need to address the Commission’s concerns before the proposed combination can receive EU merger clearance.

UPM has not provided details of the individual competition concerns contained in the Statement of Objections.

The company said it remains confident it can respond to them and intends to continue engaging with the Commission.

UPM argues that consolidation is necessary to support reliable graphic paper supply and improve the resilience of an industry facing long-term structural decline.

“UPM is confident that it will be able to respond fully to the Commission’s preliminary concerns,” the company said.

Deal Responds to Structural Decline in Graphic Paper

The proposed joint venture represents one of the most significant consolidation moves in the European graphic paper industry.

Demand for publication and communication papers has been under sustained pressure as digital media reduces consumption of traditional printed products.

UPM and Sappi have positioned the transaction as a response to those structural changes rather than simply an expansion of production capacity.

When the initial plan was announced, UPM said the combination could generate approximately €100 million in annual synergies through measures including asset and product-portfolio optimization, logistics improvements, sourcing efficiencies and operational improvements.

The companies argue that bringing their graphic paper operations together would create a business better positioned to manage declining demand while maintaining supply for customers.

Regulatory Approval Now Becomes Critical

The Statement of Objections does not mean the European Commission has blocked the deal.

However, it increases the importance of the next stage of the review, as UPM and Sappi must respond to the Commission’s preliminary findings and determine whether additional commitments or changes to the transaction may be necessary.

UPM has so far maintained its strategic rationale for the joint venture.

The company said the combination remains a necessary step to secure supply continuity for European graphic paper customers and strengthen the resilience of the sector.

Until the regulatory process is completed, UPM Communication Papers and Sappi’s graphic paper operations will continue operating as separate businesses.

For Europe’s graphic paper market, the next major development will therefore be how the companies respond to the Commission’s objections and whether the proposed 50/50 combination can ultimately secure clearance.

Last Updated on 27/08/2026 by Jota Machinery