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Domtar being acquired by British Columbia pulp and specialty paper maker

Paper Excellence picking up Dryden, Espanola mills in $3-billion transaction
Domtar - Dryden mill (1)
Domtar's Dryden mill (File photo)

West Coast pulp producer Paper Excellence is acquiring Domtar in a $3-billion all-cash deal.

The Richmond, B.C.-based company is calling it a "strategic transaction" that will accelerate its growth strategy and allow them to gain entry into the U.S. market.

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.

Paper Excellence operates eight kraft and pulp mills in British Columbia, Saskatchewan and Nova Scotia. Their Canadian facilities employ 3,000 with production of more 3 million tonnes in pulp, printing and writing, packaging, and specialty paper.

Paper Excellence Brazil was established in 2017 with 49.41 per cent interest in a mill with a company-owned eucalyptus forest.

In acquiring South Carolina-headquartered Domtar, they pick up 13 pulp and paper mills and 10 manufacturing and converting facilities across North America with 2.7 million tons of papermaking capacity and 1.5 million air-dried metric tonnes of market pulp capacity.

In Northern Ontario, Domtar has a pulp mill in Dryden and a pulp and paper mill in Espanola.

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Domtar's board of directors have approved the transaction. Domtar shareholders will have their say at an unannounced upcoming date. The transaction is expected to close in the second half of 2021.

In the May 11 news release, Paper Excellence said Domtar will continue to operate as a "stand-alone business entity" after the deal goes through, meaning Domtar's management team will stay in place and Paper Excellence will retain all of its locations.

“We are excited to add Domtar and its employees to the Paper Excellence global family," said Joe Ragan, Paper Excellence's global chief financial officer, 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," added Ragan.

“This agreement enables our shareholders to realize certain and immediate cash value at a significant premium for their shares,” said Domtar's president-CEO John D. Williams.

“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.”

This is the second major acquisition of U.S.-owned forestry assets in Northern Ontario by a British Columbia forest products company.

In April, GreenFirst Forest Products announced it was acquiring four lumber mills in Chapleau, Cochrane, Hearst and Kapuskasing from Florida pulp maker Rayonier Advanced Materials.