Richmond, British Colombia, Canada based Paper Excellence, a global diversified manufacturer of pulp and specialty packaging papers, and Domtar recently announced that they have entered into 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 percent 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 percent to the 30-day volume-weighted average price as of May 3, 2021. The all-cash transaction represents an enterprise value of approximately $3.0 billion.
After the transaction closes, 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.
“We are excited to add Domtar and its employees to the Paper Excellence global family,” said Joe Ragan, Global Chief Financial Officer of Paper Excellence. “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.”
“This agreement enables our shareholders to realize certain and immediate cash value at a significant premium for their shares,” said John D. Williams, President and Chief Executive Officer of Domtar. “This transaction validates our long-term strategic plan for our leading paper and pulp businesses, and for our continued expansion into packaging.”
Domtar is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America, and one of the largest manufacturers of pulp in the world. Its network of 13 pulp and paper mills and 10 manufacturing and converting facilities gives it approximately 2.7 million tons of papermaking capacity.