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Weyerhaeuser, Domtar form largest NA fine paper company Weyerhaeuser Company, Federal Way, WA, and Domtar Inc., Montreal, Quebec, will combine their fine paper and related assets. Weyerhaeuser shareholders will hold 55% of what is dubbed the “new Domtar”; former Domtar shareholders will own 45%. A $1.35-billion cash payment to Weyerhaeuser plus the value the closing price of Domtar stock on Aug. 22, 2006, resulted in a transaction value of $3.3 billion. Closing is expected in 1Q07. The merger is expected to save about $200
million a year in synergies in the next two years, said Steven R. Rogel, Weyerhaeuser will distribute ownership of the fine paper business and related assets to its shareholders in either a spin-off or split-off transaction. Raymond Royer, Domtar president and CEO, will lead an organization of 14,000 employees with a management team composed of executives from both firms. Marvin Cooper, Weyerhaeuser senior vice-president, cellulose fiber & white paper, containerboard manufacturing and engineering, will be COO. Domtar’s senior vice-president and CFO, Daniel Buron, will be CFO. Domtar — the new company’s name – will have its head office in Montreal with operations headquarters in Fort Mill, SC. Harold MacKay will chair a 13-member board — seven nominated by Weyerhaeuser, six by Domtar. Weyerhaeuser manufacturing assets included in the combination include eight paper mills and associated pulp mills (Dryden, ON; Hawesville, KY; Johnsonburg, PA; Kingsport, TN; Bennettsville, SC; Plymouth, NC; Prince Albert, SK; Rothschild, WI); the market pulp mill at Kamloops, BC; the coated groundwood mill in Columbus, MS. There are 14 converting centers, 13 in the US and one in Canada, and two softwood lumber mills, both in Canada. The deal more than doubles Domtar’s current paper production capacity. Based on annualized 2Q06 unaudited results
for Domtar (excluding Norampac which it owns 50:50 with Cascades) and for
Weyerhaeuser’s fine paper business, Domtar estimates the new company would
generate about $US6.5 billion in sales and $US730 million in EBITDA, before
synergies. The enterprise value will exceed $US6 |
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