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UPM Raflatac, one of the world’s leading suppliers of self-adhesive labelstock, will acquire Gumtac, the Brazilian labelstock coating and slitting business of BIC Group. Gumtac is located in Rio de Janeiro and employs approximately 35 people.

“UPM Raflatac has in recent years developed a widely recognized brand in Brazil. Through our distribution terminal in Jaguariúna, São Paulo, we have served key customers in this rapidly growing market. Gumtac’s well-managed operation will give us an excellent platform to extend our product offering and further support our customers’ growth in the region,” says Jouko Lähepelto, Senior Vice President, Americas & Asia Pacific.

The closing of the acquisition is subject to obtaining appropriate licences from local authorities.

The Ministry of the Environment and UPM have agreed upon compensation for the Natura 2000 sites and areas designated for protection under national conservation programmes in UPM's forests in Kainuu, Finland. The State will purchase approximately 380 hectares from UPM for nature protection purposes. The protected areas are situated in Losonvaara in Sotkamo and in Humalalampi in Paltamo. Moreover, UPM has agreed to privately protect approximately 330 hectares of its own land in Kainuu in accordance with the Nature Conservation Act. The total value of the agreement is €3.4 million. Part of the purchase price will be covered by a land exchange procedure.

The largest of the privately owned protected areas is Kokkamo–Kylmäjärvi in Kuhmo, covering about 220 hectares. This scenically valuable esker ridge site is home to esker lakes which range from dark-water marshy ponds to clear pools of groundwater. Many of the pools in the almost undisturbed area are surrounded by swamps.

With its woody swamps and undisturbed hill-top forests, the most environmentally significant and valuable area is Losonvaara in Sotkamo. A major part of the area lies at an altitude of over 300 metres and it includes many different types of natural woody swamps.

Paula Lehtomäki, Minister of the Environment, is pleased that the agreement was reached: "We have now managed to protect areas with nationally important nature values. The undisturbed sites and the esker ridge areas are a valuable addition to the protection of biodiversity in Finland. I am also pleased that the lengthy negotiations with UPM have led to such a positive end result.

"The negotiations took a long time. We are satisfied that we have now reached an agreement on the protected areas in our Kainuu forests," says Jorma Saarimaa, UPM's Director of Land Use and Real Estate. "Negotiations on the compensation for other Natura 2000 sites in UPM's forests can now be continued based on this agreement."

Jussi Pesonen, President and CEO of UPM, has been selected as the RISI European CEO of the Year for the pulp and paper industry for 2011.

European analysts and portfolio managers covering the forest products industry choose the European CEO of the Year annually through a survey organized by RISI, the leading information provider for the industry. The criteria for nomination include leadership, vision and strategic accomplishment. This is the second time that Mr. Pesonen has won this prestigious award, having received the title in 2007 as well.

Describing the reason behind Mr. Pesonen's nomination, one analyst commented, "UPM's recent entering into the agreement to acquire the Myllykoski Corporation and Rhein Papier signals that under Pesonen's leadership the company is proving itself to be the ultimate trailblazer of consolidation in European industry, something that is vital as the industry goes forward out of recession and back into profitability."

Another analyst pointed to Mr. Pesonen's track record of implementation, saying "Pesonen is showing clear vision in a number of ways, strategic acquisitions in paper, CAPEX spending in low cost pulp production in Latin America, and investment in C02 free energy production in Finland. What impresses me is that he is not talking about all these opportunities, he is actually doing them."

"Above all, the award is a recognition to UPM's organization which has shown strong commitment to renewal and ability to implement even the most demanding initiatives", says Jussi Pesonen.

In order to improve wood procurement options and to support self-sufficiency in wood supply to Fray Bentos pulp mill, UPM's plantation company Forestal Oriental has acquired about 25,000 hectares of land in Uruguay from a private land owner.

The purchase includes several different plots of land. About half of the land is either already planted or suitable for eucalyptus plantations. The total price for the land acquisition including the standing wood reserves is about EUR 65 million.

CSC IT Center for Science Ltd. is to establish one of the world’s most eco-efficient data centres in Kajaani, on the site of UPM's former paper mill. The data centre will be built jointly by CSC and UPM, and it will provide a state-of-the-art environment for supercomputers, data storage, and other demanding IT systems.

The construction work of the data centre will start during this autumn, and the centre will be completed in early 2012. During the construction phase the project will employ approximately tens of people. Besides CSC, other companies are also expected to utilise data centre's facilities.

”CSC’s decision to establish a computer machine room in Renforsin Ranta business park in Kajaani is an important development step for the industrial complex. The project will bring more jobs and new companies to the site”, says Kaj-Erik Lindberg, Vice President, Real Estate, from UPM.

Renforsin Ranta business park was founded by UPM in 2008 on the site of its former Kajaani paper mill. The existing diversified infrastructure makes Renforsin Ranta an attractive option for new companies seeking growth. Currently the business park houses 25 companies that employ more than 500 employees. One of the strategic growth areas of Renforsin Ranta is measurement and information technology.

”Our aim is to create one of the world’s most eco-efficient machine rooms, which will operate using locally produced energy and with a minimal carbon footprint. All the alternatives we have considered contain a binding offer on energy from the business park’s own network. This will bring significant cost benefits in electricity transfer costs”, says Kimmo Koski, Managing Director of CSC.

The computer machine room requires a lot of electricity, which is generated by hydroelectric power plants in Kajaani. The cooling water required by the machine room comes from the nearby river.

”The data centre project is extremely important for Finland. It will strengthen international competitiveness of Finnish research by providing an eco-efficient location for the new supercomputer and the services it will make available in Finland. With this project CSC, administered by the Ministry of Education and Culture, is also helping Finnish business and the generation of new jobs”, says Henna Virkkunen, Minister of Education and Culture.

CSC – IT Center for Science Ltd. provides higher education and research institutions with Finland’s best IT resources, powerful supercomputers, and extensive storage capacity. CSC also receives data from CERN, the European Organization for Nuclear Research, maintains academic library systems, and offers data storage services for the National Audiovisual Archive, KAVA for the digital archiving of all radio and television programs in Finland.

UPM-Kymmene Corporation has entered into an agreement to acquire Myllykoski Corporation and Rhein Papier GmbH ("Myllykoski"). The approximate enterprise value of the businesses acquired is EUR 900 million.

Myllykoski Corporation and Rhein Papier GmbH consist of seven publication paper mills in Germany, Finland and the United States. The total annual paper production capacity is 2.8 million tonnes. In addition, Myllykoski Corporation owns 0.8% of the Finnish energy company Pohjolan Voima Oy, with an estimated value of EUR 70 million. Following the transaction, UPM Group's balance sheet assets will increase by approximately EUR 1.6 billion.

The transaction will be financed through a directed share issue of 5 million UPM shares, with current market value of approximately EUR 60 million, and long-term debt arrangements amounting to EUR 800 million.

The transaction is subject to customary closing conditions, including, among others, the approval of the regulatory authorities. Myllykoski will continue to operate independently until the transaction will be closed. The target is to close the transaction during the second quarter of 2011.

The transaction is estimated to create annual synergy benefits exceeding EUR 100 million mainly from 2012 onwards. Synergy benefits will be reached for the most part by rationalising production, logistics and sourcing as well as reducing overlapping activities. The related restructuring and investment costs of the combined operations are estimated to be approximately EUR 100-150 million.

The transaction is estimated to have an immediate positive impact on UPM's cash flow starting from the second half of 2011 and on earnings per share in 2012.

After the completion of the transaction, UPM’s gearing ratio is estimated to rise by 8 percentage points. At the end of September 2010, the gearing ratio was 51%. UPM will report from the transaction a one-off gain of approximately EUR 300 million.

UPM CEO: Combining forces is necessary

UPM's President and CEO Jussi Pesonen says that UPM is focused on improving the cost efficiency and profitability of its European paper operations. "With this transaction, we create the conditions needed for improving UPM's cash flow and mid-term profitability.”

Pesonen draws attention to the challenging operating environment of print customers.

“Electronic media is posing a growing challenge for the print media. Print media has to be able to respond not only with good content but also with excellent cost competitiveness. UPM has confidence in the potential of the graphic industry. Our target is to be a competitive player that is able to meet customers' expectations.”

"Myllykoski is without doubt one of the leading publication paper suppliers. The company has broad-mindedly taken advantage of new business concepts and technologies. We recognise today’s Myllykoski people as solid professionals, who have a strongly customer oriented approach. This attitude and know-how fit very well with UPM.”

Profitability of the publication paper industry has been poor for almost ten years already. Demand growth is shifting to markets outside of Europe and the European industry is inefficient.

“Combining forces and rationalising production is necessary for the future of the whole industry in Europe. This means both closing unprofitable production capacity and investments in order to increase cost efficiency,” says Pesonen.

“Paper is one of UPM's core businesses and our target is undisputed cost leadership as well as growth in China and other emerging markets. However, a balanced development of the different businesses within UPM is also in our interest. As a result of consolidation in the European paper business, we will also have better financial resources to implement our growth plans in our other businesses," says Jussi Pesonen.

*** UPM will give further information on the transaction in a press conference and conference call today ***

UPM's President & CEO Jussi Pesonen and CFO Tapio Korpeinen will present the transaction in a press conference held in Finnish at UPM Group Head Office in Helsinki, Eteläesplanadi 2, today on Tuesday, 21 December at 09:30 Finnish time.

Jussi Pesonen and Tapio Korpeinen will also present the transaction in a conference call and webcast for analysts and investors, held in English, today at 13:00 Finnish time (11:00 London time, 06:00 EST).

Conference call and webcast:

You can participate in the conference call either by dialling a number in the list below or following the webcast online at www.upm.com. Only participants who wish to ask questions in the conference call need to dial in. All participants can view the webcast presentation online.

We recommend that participants start dialling in 5–10 minutes beforehand to ensure the conference starts on time.

Conference ID: 884164
Phone numbers:
Participant - North America Freephone: +1 866 803 8344
Participant - Australia LC: +61 (0)28 2239 540
Participant - Hong Kong LC: +852 300 278 23
Participant - Japan LC: +81 (3)45 8001 91
Participant - Malaysia LC: +60 (0)37 7124 468
Participant - New Zealand LC: +64 (0)99 1924 15
Participant - Singapore LC: +65 6823 2171
Participant - South Korea LC: +82 (0)23 4831 067
Participant - Taiwan LC: +886 (0)22 1626 703
Participant - India Freephone: 000 8001 0036 74
Participant - India Freephone: 000 8001 0036 74
Participant - Austria: +43 (0)268 2205 6293
Participant - Belgium: +32 (0)2 290 14 11
Participant - Czech Republic: +420 (2)3900 0636
Participant - Denmark: +45 3271 4611
Participant - France: +33 (0)1 7099 3212
Participant - Germany: +49 (0)695 8999 0509
Participant - Hungary: +36 (0)618 8932 17
Participant - Ireland: +353 (0)1 4364 108
Participant - Italy: +39 023 0350 9005
Participant - Luxembourg: +352 2700 0734 18
Participant - Netherlands: +31 (0)20 7965 012
Participant - Norway: +47 (0)2 156 31 22
Participant - Spain: +34 917 889 897
Participant - Sweden: +46 (0)8 5052 0114
Participant - Switzerland (GE): +41 (0)2 2592 7011
Participant - Switzerland (ZH): +41 (0)434 5692 63
Participant - UK: +44 (0)207 1620 177

The webcast can be replayed at www.upm.com for 12 months.

About Myllykoski
Myllykoski is a family-owned international paper group. It is one of the largest publication paper producers in the world. The company produces uncoated and coated publication papers, including newsprint.

Myllykoski and Rhein Papier operate altogether seven paper mills in total with an annual paper production capacity of 2.8 million tonnes. The mills are located in Albbruck, Ettringen, Hûrth and Plattling (two mills) in Germany, in Anjalankoski, Finland, and in Madison, the USA. Myllykoski employs approximately 2,600 people, of which 1,900 are based in Germany.

Myllykoski key figures
2009 Q1-3/10
Volume, 1,000 tonnes 2,505 1,841
Sales, EUR m 1,571 1,056
EBITDA (excl. special items*), EUR m 187 47
EBITDA (excl. special items), % 11.9 4.5

* Special items 2009 include a loss on sale of the Alsip mill and a gain on sale of the Utzenstorf mill. Special items 2010 include a gain on sale of a hydro power plant in Madison, USA.

UPM

UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 23,000 people and it has production plants in 15 countries. In 2009, UPM's sales amounted to EUR 7.7 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com

UPM, Corporate Communications
Media Desk, tel. +358 40 588 3284
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UPM has partnered with Monocle – a leading business and cultural affairs magazine – to produce the Monocle Finland Survey.

Printed on three UPM grades, the Monocle Finland Survey covers all aspects of Finnish culture, economy and design. It is part of series of national surveys produced by Monocle which has previously included Lebanon and Sao Paulo in Brazil.

Two of Monocle’s London-based editors, Hugo Macdonald and Tom Morris along with Nordic correspondent, Elna Nykänen Andersson travelled throughout Finland, meeting with the nation’s leading thinkers, politicians, designers and entrepreneurs. They also worked with a host of local writers and photographers.

Tyler Brûlé, Monocle’s editor in chief, believes that the timing of the survey could not be better. "Finland is undergoing regeneration in many fields, with a select group of the country’s finest business people, academics, opinion builders, artists and sportsmen redefining brand Finland. We are excited to be in Finland at such a dynamic time, and are proud that Finland is our first nationwide survey in this part of the world.”

UPM papers were chosen for their high qualities both in terms of reproduction and finishing. UPM Finesse Premium Silk was chosen for the cover, UPM Fine for the text pages and UPM Finesse Matt for a special four-page feature on UPM – The Biofore Company.

"It is extremely pleasing to be able to collaborate with a high profile brand such as Monocle. Their commitment to quality design and print provides a perfect match to UPM's paper offering." says Marketing Director Kari Ylönen from UPM's Paper Business Group.

To find out more visit the Monocle website at: http://www.monocle.com/Finland/

For more information, please contact:
Mr Will Stone, Head of Communications UK & Ireland, UPM, tel. +44 (0) 7841 493447
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Ms Emily Smith, PR Manager, Monocle, tel. +44 (0) 20 7725 4388
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About UPM
UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 24,000 people and it has production facilities in 15 countries. In 2008, UPM's sales amounted to EUR 9.5 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com

About Monocle
Launched in February 2007, Monocle is a premium media brand with magazine, web and retail divisions. Headquartered in London, Monocle delivers a single, seamless voice in both print and digital form to a discerning, highly educated global audience of men and women. Focusing on global affairs, business, culture and design, our mission is to keep an eye on the world.

UPM will respond to the growing demand for label papers by increasing the label paper production capacity at its Tervasaari mill in Valkeakoski, Finland. The rebuild of the Tervasaari paper machine 8 will increase the capacity by almost 30,000 tonnes annually.

The installation work will start in March 2011 and the main part of it will be done in early 2012. The whole new capacity will come on stream during the second quarter of 2012.

"With the rebuild of the Tervasaari PM 8 we want to ensure our market leader position in label papers and support our customers' growth," says General Manager Juha Kääriäinen of UPM Tervasaari.

UPM Tervasaari paper mill in Valkeakoski manufactures yearly some 360,000 tonnes of label, envelope and kraft papers. The mill employs about 400 people.

The PM 8 was built in 1996 and the machine produces label base papers. Its major rebuilt was in year 2006.

For more information, please contact:
Mr Juha Kääriäinen, General Manager, UPM, Tervasaari, tel. +358 204 162 300

Metso has signed an agreement with UPM Kymmene for the replacement of the ageing Quality Control System in Papeteries de Docelles (France). Start-up of the project is planned at the end of August 2011. The value of the replacement project will not be disclosed.

This replacement project concerns the PM1 in Docelles. The scope of supply will include two PaperIQ Select scanners. The first one will be installed at the reel and will be equipped with IQLaserCaliper sensor for the caliper measurement. The second scanner will be installed in size press.

With this new quality control system, Papeteries de Docelles will be able to make multivariable MD and CD controls together with color control. The system will also feature DNAhistorian and DNApaperMap applications for the history data and profiles storage.

Thanks to the accurate and stable measurements together with advanced controls featured by the PaperIQ Select quality control system, this investment will help UPM Kymmene – Papeteries de Docelles to improve performances of key indicators such as end-product quality. Furthermore, Papeteries de Docelles will benefit from local Metso’s expert service team to insure the continuous improvement of its production.

Papeteries de Docelles specializes in the production of printing and envelope papers and is situated in Docelles (Vosges, France) in the heart of Europe. Papeteries de Docelles is part of the UPM – Kymmene group, one of the world leaders of the forest industry with production units in 15 countries. In 2009, UPM's sales totalled € 7.7 billion. UPM has production plants in 15 countries and it employs approximately 23,000 people worldwide.

Metso is a global supplier of sustainable technology and services for mining, construction, power generation, automation, recycling and the pulp and paper industries. We have about 27,000 employees in more than 50 countries. www.metso.com

For further information, please contact:

Patrick Rojo, Sales & Service Account Manager, Process Automation Systems, Automation business line, Metso, Tel. +33 557 92 10 40

UPM's Chudovo Plywood Mill celebrates its 20th anniversary on Wednesday, 3 November 2010. The mill has been the pioneer of the modern plywood industry in Russia and continues to set benchmark for the local plywood industry.

The Chudovo mill manufactures top quality WISA® birch plywood and veneer from local raw material. In addition to standard plywood and veneer, one third of the mill's production is further processed by coating. The mill's products are used primarily in transport and construction industries and carpentry. The mill produces also special plywood for the LNG carriers.

Approximately 75% of the mills production goes to exports, primarily to Europe. The location in Chudovo in the Novgorod region, close to St Petersburg, is very good when it comes to transport infrastructure. Road, rail and sea ports are all easily accessible. The mill has a central role in UPM Plywood's distribution business as well as in birch plywood production in general.

"Since the early days, the mill's production capacity has doubled to the current 100,000 cubic meters per year. Also, the mill's operational efficiency and the degree of further processing have consistently increased over the years. This is largely due to the long term commitment of the local personnel, of which, many have worked there since the very beginning", says Jouni Töyräs, Vice President, Distribution Business Unit at UPM Plywood.

The Chudovo mill has constantly improved its operations. For this systematic development work, the mill has been granted both international ISO 9001 and ISO 14001 certificates for quality and environment as well as VTT and DIN Otto Graf certificates. The rating agency Expert RA has also granted the mill the environmental rating Eco A.

The plywood mill is one of the biggest employers in Chudovo area and significant also in the Novgorod region. The mill employs around 600 persons and several hundreds more indirectly in trade and services.

The constituent documents of CJSC "Chudovo-RWS" – the first ever Soviet-Finnish joint venture – were signed on 5 July 1988 by the Soviet Novgorodlesprom and the Finnish Schauman Wood Oy and Raute Oy. Plywood production at the mill started on 1 November 1990. UPM became the sole owner of the mill in 2005.

For more information, please contact:
Mr. Anatoli Zhukovets, General Director, UPM Chudovo, tel. + 7 921 1946080
Mr. Jouni Töyräs, Vice President, Distribution Business Unit, UPM Plywood, tel. +358 40 561 1091

UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 23,000 people and it has production plants in 15 countries. In 2009, UPM's sales amounted to EUR 7.7 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com

UPM Plywood offers high-quality WISA plywood and veneer products mainly for construction, transport and furniture industries. The sales of UPM Plywood in 2009 were EUR 306 million and it has about 2,600 employees. UPM has 6 plywood mills and 2 veneer mills in Finland, a plywood mill in Russia and a plywood mill in Estonia. www.wisaplywood.com

UPM in Russia
In Russia, UPM employs about 1,000 people. UPM owns a plywood mill in Chudovo and a sawmill in Pestovo in the Novgorod region. In addition, the company has sales and logistics offices in Moscow, St. Petersburg and Ekaterinburg as well as the UPM Raflatac slicing and distribution terminal in St. Petersburg. The wood and biomass sourcing business includes offices in St. Petersburg, Petrozavodsk, Novgorod, Vologda, and large logging company in the Leningrad region - Tikhvinskij lespromhoz. www.upm.ru