Paper manufacturers Stora Enso, Holmen and Norske Skog were all forced to issue statements to the stock exchange last week (2 September), after a report in Finnish newspaper Helsingin Sanomat caused a dramatic spike in the companies' share prices.
According to the report, the three companies are planning "the partial or complete merger" of their newsprint facilities, as part of a plan to cut excess production capacity that would include the closure of the least profitable installations.
Trading in all three firms' shares had to be suspended on the morning of the 2 September after Norske Skog gained 19%, Holmen 6% and Stora Enso 4.6%, following publication of the article.
As trading resumed in the afternoon, both Holmen and Stora Enso denied that any talks had taken place, while Norske Skog said that it did not wish to comment on "speculations about strategic processes".
However, the Norwegian manufacturer added: "Norske Skog has on several occasions stated the need for restructuring of the industry and the company is willing to contribute to such an initiative."
Meanwhile, Holmen director Ingela Carlsson told PrintWeek that the company's president was an advocate of the need for capacity reductions in the sector.
Stora Enso confirmed that there were "no discussions ongoing" in relation to the matter reported in Helsingin Sanomat.
Separately, Stora Enso has announced that it will permanently shut down 195,000 annual tonnes of newsprint capacity, with the closure of its newsprint machine at the Maxau mill in Germany, resulting in the loss of 180 jobs.
Dick Blin, pulp and paper officer at the International Federation of Chemical, Energy, Mine and General Workers' Unions, said at the moment, the situation is based on rumours.
"Following the story in Finnish newspaper Helsingin Sanomat, it was alleged that the three companies, Stora Enso, Norske Skog and Holmen, have said they are in meetings to merge," he said. "However, it is not quite clear how, and whether it would be through private equity or not."
He added that there was definite overcapacity in the European newsprint market, even following several shutdowns in the sector. "It is inevitable that something will happen, the question is what form it will take. There is no question, sadly, that it will affect jobs."
Blin also claimed that profits for most European-based pulp and paper producers have started to look better in the second quarter of 2010. "It seems the sector has had the worst of the recession and it has seen some improvement," he said.
Speculation that there will be consolidation in the sector has been around for years. In 2008, newsprint manufacturer UPM said it had not ruled out consolidation, following rumours earlier in the year that UPM could merge with Stora Enso.
