News

Speculation is growing that two of the paper sector’s biggest manufacturers, Stora Enso and UPM-Kymmene, could be set for a merger.

Shares in the two jumped this week amid market ru­­mours a merger could be on the cards, with Stora Enso’s share price up by 6% on Monday and UPM’s up 5.5%.

It is understood that neither company has commented on the speculation internally and no official comment has been made.

However, the speculation comes as the European papermaking market gears up for a period of consolidation.

Norske Skog, the newsprint manufacturer, is also believed to be on the verge of a sale to one of its Scan­­dinavian rivals, while Sappi, the South African group, said in February that it planned to be active in European paper M&A to combat overcapacity.

While a number of big-money deals are expect­­ed in the coming months, some believe a merger between Stora Enso and UPM-Kymmene would struggle to get European competition commission approval.

Speculation came as Stora Enso revealed plans to sell merchant business Papyrus to private equity firm Altor Fund for €640m (£491m).

Stora Enso chief executive Jouko Karvinen described the deal as “another concrete step in Stora Enso’s strategy of focusing the business portfolio of our group”.

He added: “After successfully building up our fine paper business in the past few years, we believe it is critical this channel can continue to develop independently.”