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Resolute wants to grow pulp holdings with acquisition of Fibrek

One of Canada’s largest pulp and paper companies, Resolute Forest Products, has announced its intention to make an unsolicited offer to acquire Fibrek, a pulp producer with one mill in Quebec and two in the U.S.

One of Canada’s largest pulp and paper companies, Resolute Forest Products, has announced its intention to make an unsolicited offer to acquire Fibrek, a pulp producer with one mill in Quebec and two in the U.S.

“The acquisition of Fibrek is consistent with our strategy,” stated Richard Garneau, president and CEO of Resolute. “As we continue to focus on building a sustainable and profitable company, growth in expanding global pulp markets is the right move, at the right time, for Resolute Forest Products.”

Garneau also cites “optimization opportunities” from the acquisition.

The offer will be $1.00 per share of Fibrek: $0.55 in cash and 0.0284 of a Resolute Forest Products common share.

Fibrek’s board of directors is evaluating the announcement with its financial and legal advisors and make a formal recommendation to shareholders as soon as possible.

Resolute has entered into lock-up agreements with three significant shareholders of Fibrek, including Fairfax Financial Holdings Limited and Pabrai Investment Funds, holding, directly or indirectly, approximately 46% of Fibrek’s issued and outstanding common shares.

The offer represents a premium of approximately 39% over the closing price of Fibrek’s shares on November 28, 2011.

Fibrek produces virgin and recycled kraft pulp at three mills located in Saint-Félicien, Québec, Fairmont, West Virginia, and in Menominee, Michigan with a combined annual production capacity of 760,000 tonnes. The company has approximately 500 employees.

Resolute has a diverse range of products, including newsprint, commercial printing papers, market pulp and wood products. It owns or operates 18 pulp and paper mills and 23 wood product facilities in the United States, Canada and South Korea.