KINGSPORT — A Canadian pulp and paper company has agreed to acquire Domtar in a $3 billion cash transaction that will see the company continue to be run by its management team and at the mill of Kingsport to remain in business.
Domtar made the announcement Tuesday afternoon on its website, saying the company has entered into a strategic business combination with Paper Excellence, a privately owned manufacturer of pulp and specialty papers, printing, writing and packaging with operations in Canada and Brazil.
Paper Excellence is financially based in the Netherlands with its head office in Richmond, BC. It is the second largest pulp and paper producer in Canada.
Under the agreement, Paper Excellence will acquire all of the issued and outstanding common shares of Domtar for $55.50 per share in cash. The purchase price represents a premium of approximately 37% over Domtar’s closing stock price on May 3.
“We are thrilled to add Domtar and its employees to the global Paper Excellence family,” said Joe Ragan, Global CFO of Paper Excellence. “This marks a major step in our overall strategy of identifying well-positioned assets and positioning them for growth. Domtar fits naturally into our culture of operational excellence.
Domtar’s head office is located in Fort Mill, South Carolina. The Kingsport mill has been in the city center since 1916, and its conversion from producing fine paper to producing packaging board will keep it here for another 100 years, company officials said recently.
Last week, Domtar officials confirmed that its management was in talks with another company about a possible deal.
Following the closing of the agreement, Paper Excellence intends to continue Domtar’s operations 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 sites, according to a press release on the acquisition.
“Our Kingsport plant has been sold and changed names several times over many years, and each change has had a positive effect on our community. I am confident that will be the case this time too,” said Miles Burdine, President and CEO of the Kingsport Chamber of Commerce. “Our factory has been around for over 100 years and another 100 years of success are in Kingsport’s future.”
The agreement has been unanimously approved by Domtar’s Board of Directors. The transaction is expected to close in the second half of 2021, subject to Domtar shareholder approval, receipt of required regulatory approvals and other customary closing conditions.
City manager Chris McCartt said after speaking with local Domtar officials, it was made clear the acquisition would be a positive and strategic move for the company and the mill.
“I was delighted to hear that the plant conversion will continue, which when completed will provide competitive employment, just as the plant has done for over 100 years,” McCartt said. .