European Forestry Pulse #118 🌲

Hello,

Two forest deals landed on the same desk in Brussels last week. One got waved through in a single paragraph. The other got a formal list of complaints and a November deadline.

The difference between them tells you where the power sits in European forestry. And it is not where most people look for it.

Here's what's moving European forestry this week:

On 26 August the European Commission sent UPM and Sappi a Statement of Objections. The case reference is M.12270.

The two companies want to combine their graphic paper businesses. Graphic paper is what magazines and books are printed on.

The deal is a 50-50 joint venture worth €1.42 billion. UPM's side is valued at €1.10 billion. Sappi's at €320 million. They are the two largest makers of communication paper in the European Economic Area. Together they would lead the market.

This is the part most coverage gets wrong. It is not a ban. It is not a fine. It is not a final decision. It is a written list of concerns. The Commission sets out what it thinks is wrong and asks the companies to answer.

UPM and Sappi can now reply in writing. They can read the Commission's file. They can ask for a hearing. They can offer to change the deal.

UPM called it a customary step and said it is confident it can respond fully. Do not read this as a deal collapsing. Read it as a deal entering its hardest phase.

Two products are named. Coated mechanical paper, which is magazine paper. And coated woodfree paper. The concern covers the European Economic Area, the UK and Switzerland. The Commission's preliminary view is that the combined company could raise prices and lower quality for its customers.

UPM and Sappi argued the merger brings cost savings, environmental gains and a more resilient supply. The Commission says it is not yet convinced those benefits outweigh the harm.

The deal was notified on 19 March. The in-depth investigation opened on 28 April. On 26 May the Commission stopped its own clock. The information it had asked for did not arrive in time.

That pushed the decision date back. Brussels now has until 11 November 2026 to clear the deal, block it, or demand changes.

Put that date in your calendar.

If you grow pulpwood: this deal exists because graphic paper demand is falling. Consolidation downstream means fewer independent buyers upstream.

If you sell to a mill: find out who owns it. Ownership maps change faster than buyer lists do.

If you buy paper: the Commission is arguing your side of this right now. However it ends, your supplier landscape in 2027 will not look like 2025.

If you invest in forests: the number of buyers within reach of an asset is a valuation input. This deal changes that number for parts of Europe.

Two of the largest paper companies in Europe want to merge because their market is shrinking. That is not a scandal. That is an industry trying to stay solvent while its main product declines.

Brussels is not asking whether shrinking is allowed. It is asking who pays for it. And here is the encouraging part. Europe still has a working process for that question.

A regulator that stops its own clock rather than wave a deal through is a regulator doing the job properly. Slow is not the same as broken. The wood will still be cut. The open question is who converts it, and at what price.

Sources: European Commission — Commission sends Statement of Objections over proposed joint venture between UPM and Sappi | European Commission — competition case register, Case M.12270 | Lesprom — UPM receives European Commission statement of objections over Sappi joint venture

Tornator published its half-year results on 28 August.

Net sales were €102.7 million, against €104.5 million a year earlier. Operating profit under IFRS came in at €70.8 million, down from €84.4 million. The company still bought more than 12,000 hectares of new forest in Finland. Total investments reached nearly €60 million.

It also ended its own forestry-worker operations. Silviculture now runs through a contractor network. The reason is the interesting part. Tornator's own employees had already fallen below 5% of the silviculture work being carried out.

Why it matters: That is not really a decision to outsource. It is an accounting catch-up with something that already happened. Large European forest owners have drifted toward contractor models for years. The 5% line is where the drift becomes visible enough to act on.

Note the other half. Profit fell and the company kept buying land. Buying forest in a soft market is a long-horizon bet, and this owner made it.

The takeaway: If you are a contractor, your client base is consolidating and your leverage is quietly growing. If you own forest, ask a simple question. Who will actually do your silviculture work in five years? Increasingly, the answer is not an employee. Sources: Tornator — Half-year report | Global Newswire

On 26 August the European Commission approved joint control of Chilean timberland assets. The buyers are British Columbia Investment Management Corporation, APG Asset Management and BTG Pactual Timberland Investment Group. The assets currently sit inside Hancock Chilean Plantations SpA. Case number M.12578.

It went through the simplified procedure. No transaction value was disclosed, and no area either. The Commission's stated reason for clearing it matters. The deal has limited impact on the European Economic Area.

Why it matters: Read this next to today's Big Story.

The same regulator, in the same week, objected to one forest-sector deal and cleared another. The difference is not that trees matter less than paper. It is about where the customer sits. Chilean plantations barely touch the European market Brussels protects. The paper deal is different. Its customers are European printers and publishers.

Here is the part worth knowing. Merger rules exist to protect buyers from concentrated sellers. Forest owners are sellers. When your buyers consolidate, that rulebook does much less for you.

A Canadian pension manager, a Dutch pension manager and a US timberland manager now share control of Chilean plantations. Ten years ago that was a headline. Today it clears in a paragraph.

The takeaway: Institutional money keeps flowing into growing trees while the business of converting them consolidates. Nobody will regulate you into a better price. You get there by knowing how many real buyers you have. That is today's exercise, below. Sources: European Commission — Daily News, 26 August 2026 | INSIGHT EU Monitoring — Commission approves acquisition of joint control of Hancock Assets by BCI, APG and TIG, Case M.12578

IUCN published its Global Land Restoration Achievement Database report during the UN desertification COP in Mongolia.

More than 124.3 million hectares are under restoration, rehabilitation or improved management worldwide. That is roughly twice the area of France.

It is also 10.4% of what countries pledged. Those pledges total 1.2 billion hectares across four international frameworks. Three regions account for 80% of the total. East Asia at 31%, South Asia at 30%, Sub-Saharan Africa at 19%.

Europe is not among them. Every remaining region sits somewhere between 6% and 0.1% of the global total.

Why it matters: EU Member States submitted draft National Restoration Plans on Tuesday. We flagged that deadline in the last issue.

This report is the backdrop those plans land against. The message is the same everywhere. Pledging is easy. Delivery is slow. Measurement is the bottleneck. The standardised database is the genuinely useful part here. You cannot manage what nobody counts the same way twice.

The takeaway: If your country submitted a draft plan this week, read it for one thing first. Not the targets. The monitoring method. That is what decides whether the hectares on your land ever get counted at all. Sources: IUCN — Global land restoration gains ground, but delivers only 10% of national pledges

Find out who really owns your buyers. Three names, twenty minutes.

This is the same exercise behind every merger review in Brussels. The Commission does it with market share data and lawyers. You can do it with a browser and a coffee.

The number you end up with is not academic. It is the number of people who can afford to walk away from your price.

"Are the big companies squeezing forest owners?"

Someone will ask you this. At a meeting, at a family lunch, or under your own post. There is a real answer. It involves market structure, and it is far more interesting than either "yes" or "no".

Most foresters reach for the defensive version. It convinces nobody, and it makes the asker more suspicious than before. You have thirty seconds and no notes. What do you say?

The number of independent buyers within reach of your forest is a valuation input. Fewer buyers means a lower price, whatever the growing stock says.

It is not in the yield table. It is not in the standing volume. It shows up on the day you ask for offers and only two arrive.

I wrote the Forest-Investment Dictionary with Danish forest economist Anders Tærø Nielsen. It has 151 pages, 11 chapters, 14 printable tools, and 3 calculators. Investors learn to read a forest. Foresters learn to read a term sheet.

When the market turns, the people who can read the numbers make the better calls. The price is €99. Get yours below.

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Until Tomorrow!

Wish you all the best: Peter

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