Paper Excellence enters into strategic purchase of Domtar shares
RICHMOND lence, a global diversified manufacturer of pulp and specialty, printing, writing, and packaging papers, , B.C. & FORT MILLS, S.C. - PAPER EXCELand Domtar, a leading provider of fibre-based products, have announced a strategic business combination under which the Paper Excellence group of companies will acquire all of the issued and outstanding shares of Domtar common stock for $55.50 per share, in cash.
The purchase price represents a premium of approximately 37% to Domtar’s closing share price on May 3, 2021, the last trading day prior to the Domtar’s statement responding to media reports regarding a potential business combination between Domtar and Paper Excellence, and a premium of approximately 44% to the 30-day volume-weighted average price as of May 3, 2021. The allcash transaction represents an enterprise value of approximately $3 billion.
Paper Excellence intends to continue the operations of Domtar as a stand-alone business entity. Domtar will continue to be led by its management team and Paper Excellence plans to retain its corporate and production locations.
Joe Ragan, global chief financial officer of Paper Excellence, commented, “This marks a major step in our global strategy of identifying well-positioned assets and positioning them for growth. Domtar is a natural fit for our culture of operational excellence. We are enthusiastic about entering the American market as we continually improve Paper Excellence’s ability to serve its expanding blue-chip customer base.”
The agreement was unanimously approved by the Domtar board of directors. The transaction is expected to close in the second half of 2021, subject to Domtar shareholder approval, receipt of the required regulatory approvals and other customary closing requirements.
The acquisition of Domtar by Paper Excellence creates one of the largest pulp and paper products companies in North America. It would emerge at a time when pulp prices are moving out of a slump pulled by unprecedented high lumber products prices that have in some cases tripled.
In January, Domtar agreed to sell its personal care business to American Industrial Partners for $920 million.
The cooking plant features Valmet’s new continuous cooking G3 technology and includes ImpBin technology for steaming and impregnation of the wood chips. This two-vessel system provides excellent pulp quality with very low reject content.
Paper Excellence, based in Richmond, British Columbia, manufactures pulp packaging and specialty paper and has eight facilities in Canada and owns a 49% stake in a mill located in Três Lagoas, in the state of Mato Grosso do Sul where the company specializes in the production of bleached eucalyptus pulp, used in the manufacture of packaging, tissue products for personal hygiene, office supplies, printed media, decoration and special papers such as issuing vouchers. Last year, Paper Excellence shutdown its Nova Scotia pulp mill after it failed to meet provincial pollution control standards . Paper Excellence is owned by Jackson Widjaja, the grandson of Indonesian businessman Eka Widjaja.
