By P&PC Staff
By P&PC Staff
Paper Excellence will acquire Domtar in an all-cash agreement with an enterprise value of approximately US$3 billion.
Paper Excellence, a global diversified manufacturer of pulp and specialty, printing, writing and packaging papers based in Richmond, B.C., will buy Domtar shares for $55.50 each.
After the transaction closes, Paper Excellence intends to continue the operations of Domtar as a stand-alone business entity. Domtar, which is headquartered in Fort Mill, S.C., will continue to be led by its management team. Paper Excellence plans to retain its corporate and production locations, which include mills in Windsor, Que., Espanola, Ont., Dryden, Ont. and Kamloops, B.C.
The purchase price represents a premium of about 37 per cent to Domtar’s closing share price on May 3, 2021, the last trading day prior to Domtar’s statement responding to media reports regarding a potential business combination between Domtar and Paper Excellence, and a premium of approximately 44 per cent to the 30-day volume-weighted average price as of May 3, 2021.
“We are excited to add Domtar and its employees to the Paper Excellence global family,” says Joe Ragan, global chief financial officer of Paper Excellence, in a statement.
“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.
“We have long admired Domtar’s expansive global footprint and believe that it will be a valuable addition to Paper Excellence. We look forward to investing in Domtar’s assets and people for long-term growth.”
John D. Williams, president and chief executive officer of Domtar, says, “This transaction validates our long-term strategic plan for our leading paper and pulp businesses, and for our continued expansion into packaging.
“Our dedicated employees have been instrumental to Domtar’s success and I am glad to see that this transaction supports the strategy that our team has worked so hard to develop over the last several years.
“As part of Paper Excellence, we will build on that momentum.”
The deal has been 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 and closing conditions.