Another B.C. company is making a major expansion into the U.S. Paper Excellence announced Tuesday it will buy U.S. pulp and paper company Domtar (NYSE: UFS) (TSX: UFS) for US$3 billion.
Domtar owns more than a dozen pulp mills in North America, four of which are in Canada, including one in Kamloops.
In a deal announced Tuesday, Paper Excellence will pay Domtar US$55 per share – a 44% premium on Domtar’s averaged weighted price over a 30-day period. Domtar’s stock shot up on the announcement, from $57.28 per share on May 10 to $66.96 per share at close of markets Tuesday.
The acquisition has been approved by Domtar's board of directors, but will still have to be approved by shareholders. The transaction is expected to conclude in the second half of 2021.
Paper Excellence said it will continue to operate Domtar as a stand-alone entity.
“As such, Domtar will continue to be led by its management team and Paper Excellence plans to retain its corporate and production locations,” the company said in a news release.
“This marks a major step in our global strategy of identifying well-positioned assets and positioning them for growth,” Joe Ragan, global chief financial officer for Paper Excellence, said in a news release. “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.”
The acquisition of Domtar will make Paper Excellence Canada’s largest pulp and paper producer.
Paper Excellence, headquartered in Richmond, is a private company owned by Jackson Widjaja, the son of Teguh Widjaja, former head of Indonesia’s Sinar Mas Group, which owns Asia Pulp and Paper, and grandson of the late Eka Tjipta Widjaja, the company's founder.
Paper Excellence made its entrance in Canada in 2007 with the purchase of a single pulp mill in Saskatchewan. It went on to buy up pulp and papers mills across Canada. In 2019, it acquired Catalyst Paper and its three B.C. mills.
Paper Excellence owns five pulp and paper mills in B.C., one in Saskatchewan and one in Nova Scotia. The acqusition of Domtar will add four more Canadian mills, and nine American mills to its stable of North American pulp and paper mills.
(This story has been updated with a correction. Teguh Widjaja was described as the late father of Jackson Widjaja. It was, in fact, his grandather, Eka Tjipta Widjaja, who died in 2019.)
