M-real Corporation Stock Exchange Bulletin 30.1.2007


M-real will book a gain of approximately EUR 135 million from the

On the basis of a proposal by a committee of the members of the board
who are independent of parent company Metsäliitto, the Board of
Directors of Metsäliitto Group subsidiary M-real Corporation has
decided today to sell 9% of Metsä-Botnia’s shares to Metsäliitto, and
to reject UPM-Kymmene’s EUR 500 million offer to buy 15% of Metsä-
Botnia’s shares. Metsäliitto is paying EUR 240 million in cash for
the shares, and M-real will book a capital gain of approximately EUR
135 million from the transaction.

”The sale of Metsä-Botnia shares to Metsäliitto is part of M-real’s
restructuring programme that was announced on 18 October 2006. The
transaction will enable us to proceed swiftly with the restructuring
programme. The other options could have significantly delayed the
programme because of the competition authorities’ approvals and
contractual negotiations. The sale will significantly strengthen M-
real’s balance sheet and financial position. It will have a positive
impact of about 20 percentage points on M-real’s gearing,” says Mikko
Helander, CEO of M-real.

On 9.11.2006 UPM-Kymmene, too, announced an offer to buy Metsä-Botnia
shares owned by M-real. The UPM offer concerned 15% of the shares of
Metsäliitto Group subsidiary Metsä-Botnia and included a premium for
control, because acceptance of the offer would have given control of
Metsä-Botnia to UPM.

The committee of members of M-real’s Board of Directors who are
independent of the parent company Metsäliitto evaluated the offers
and considered that it is in the interest of the company and all its
shareholders to accept the offer from Metsäliitto. M-real’s Board of
Directors based its decision on the committee’s proposal.

”It was difficult to compare the offers on the same basis, because
the offers concerned different numbers of Metsä-Botnia shares and
UPM’s offer involved a premium for control. From M-real’s point of
view, approval of UPM’s offer would have resulted in significant
operational and strategic problems and uncertainty factors. The
transfer of control to a competitor would have led to a problematic
situation, particularly with regard to M-real’s mills in Kaskinen,
Kemi, Joutseno and Äänekoski, as these mills are integrated with
Metsä-Botnia’s production plants”, says Kim Gran, President and CEO
of Nokian Tyres, who chaired the independent committee.

”UPM’s offer involved considerable legal uncertainties as well -
particularly from the point of view of competition law.
Correspondence with UPM also shows that approval of their offer would
have required changing the agreements that guide Metsä-Botnia’s
operations, and this was not possible. In addition, the sale that UPM-
Kymmene proposed would not have been in accordance with M-real’s
strategic interests”, Kim Gran explains.

The Board’s decision to sell 9% of Metsä-Botnia’s shares at a price
of EUR 240 million is supported by a fairness opinion from the
JPMorgan investment bank, according to which the price paid to M-real
is fair financially to the shareholders of M-real. JPMorgan’s sole
role was to conduct the valuation of Metsä-Botnia and to provide a
fairness opinion relating to the sale that has now been finalised.
Roschier Attorneys Ltd acted as the committee’s legal adviser.

More information:

Mikko Helander, CEO, M-real, tel. +358 10 469 4300

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