Paper Excellence has wasted no time in capitalising on its recent Domtar acquisition to accelerate consolidation in the North American pulp, paper and packaging markets.
Just a few months after closing its $3 billion deal for Domtar, Paper Excellence has announced it is to purchase Canada-based Resolute for an enterprise value of around $2.7 billion.
Resolute will become a wholly owned subsidiary of Domtar, under the auspices of the Paper Excellence Group, and continue to operate on a business-as-usual basis under the Resolute name. The Resolute management team will remain in place at the company’s headquarters, meaning Montreal will become an important hub for the group’s North American businesses. Furthermore, Paper Excellence said it plans to retain Resolute’s production locations and levels of jobs.
Paper Excellence said it intends to support Resolute management’s existing growth strategy, focused on strategic investments in its lumber and pulp businesses, and “maximising the value” of its paper and tissue businesses. It also plans to undertake a detailed feasibility study for the eventual conversion of Resolute’s Gatineau, Quebec, newsprint mill to the production of packaging paper.
The purchase price of $20.50 a share represents a premium of more than 60% on Resolute’s closing share price on 5 July. The transaction requires the approval of Resolute’s stockholders as well as the usual regulatory approvals, and is expected to close in the first half of 2023.