Finland's UPM To Take Over Uruguay Mill

Paper maker UPM-Kymmene Corp. said Tuesday it has completed a deal to take over the Fray Bentos pulp mill and forest plantations in Uruguay from other Finnish companies.

HELSINKI (AP) -- Paper maker UPM-Kymmene Corp. said Tuesday it has completed a deal to take over the Fray Bentos pulp mill and forest plantations in Uruguay from other Finnish companies.

UPM, the world's largest magazine paper producer, said it will gain 91 percent ownership of the mill and 100 percent of eucalyptus plantation forestry company Forestal Oriental.

"UPM, Metsaliitto Cooperative, M-real Corp., and Oy Metsa-Botnia Ab (Botnia) have today completed the transaction," the company said.

UPM will get Metsaliitto's and Botnia's share of the mill and Forestal Oriental. UPM said it expects the transaction to have a positive impact on its result next year, and that it will record a capital gain of euro220 million ($325 million) in the fourth quarter of 2009.

"The enterprise value of the Fray Bentos pulp mill and Forestal Oriental totals approximately euro1.6 billion," UPM said.

UPM has said the transaction will strengthen its position in emerging markets and substantially increase its pulp production capacity.

Meanwhile, UPM has been cutting pulp production in Finland, where last month it announced 870 job cuts and four mill closures. Earlier this year it temporarily laid off some 1,200 workers at domestic mills to save costs.

The Fray Bentos pulp mill, which cost $1.2 billion to build, is in western Uruguay, near the Argentine border. It started production in November 2007.

Helsinki-based UPM-Kymmene, one of Europe's largest forest products companies, has 64 plants in 15 countries with 170 sales and distribution companies worldwide. It employs 24,000 people worldwide.

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