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Paper Excellence buys Domtar

Paper Excellence, a manufacturer of pulp and specialty, printing, writing and packaging papers, will acquire all of the issued and outstanding shares of Domtar common stock for $55.50 per share, in cash. Domtar will continue operations as a stand-alone entity and will continue to be led by its management team.
Domtar
The Domtar pulp mill is on Mission Flats Road.

Domtar Corp., which owns and operates the pulp mill in Kamloops, has reached an agreement to be acquired by Paper Excellence in a deal worth an estimated $3 billion.

Paper Excellence, a manufacturer of pulp and specialty, printing, writing and packaging papers, 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 per cent to Domtar’s closing share price on May 3, 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 per cent to the 30-day volume-weighted average price as of May 3.

After the transaction closes, Paper Excellence intends to continue the operations of Domtar as a stand-alone business entity. As such, Domtar will continue to be led by its management team and Paper Excellence plans to retain its corporate and production locations.

“This marks a major step in our global strategy of identifying well-positioned assets and positioning them for growth,” said Joe Ragan, global chief financial officer of Paper Excellence. “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.”

Domtar president and CEO John D. Williams said the agreement gives shareholders immediate

cash value at a significant premium for their shares.

“This transaction validates our long-term strategic plan for our leading paper and pulp businesses and for our continued expansion into packaging,” he said. ““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.”

Shares of Domtar Corp. soared by 13.6 per cent on Tuesday, toward a 2.5-year high, following announcement of the deal.

After the deal closes, which is expected to occur in the second half of 2021, Domtar will continue operations as a stand-alone entity and will continue to be led by its management team.

Paper Excellence has its headquarters in Richmond and is owned by Jackson Widjaja, whose family runs Asia Pulp and Paper, which is part of the Indonesian agri-business group Sinar Mas. Paper Excellence was created in 2007, though it and Sinar Mas are owned by the Widjaj family — Sinar Mas by founder Eka Tjipta Widjaja.

Paper Excellence owns seven mills and a distribution centre in B.C., all of which employ about 2,000 people. The company also owns a mill in Saskatchewan — at Meadow Lake, its first purchase in Canada, in 2007 — and a mill in Nova Scotia. The company also has operations elsewhere, including in France and Brazil, and has approximately 7,000 employees worldwide.