KINGSPORT — A Canadian-based pulp and paper company has agreed to acquire Domtar in a $3 billion cash deal that will see the company continue to be led by its management team and the Kingsport mill remain in operation.
Domtar made the announcement Tuesday afternoon on its website, saying the company has entered into a strategic business combination with Paper Excellence — a privately held manufacturer of pulp and specialty, printing, writing and packaging papers with operations in Canada and Brazil.
Paper Excellence is financially based in the Netherlands with its headquarters in Richmond, British Columbia. It is the second-largest pulp and paper producer in Canada.
Under the agreement, Paper Excellence 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% to Domtar’s closing share price on May 3.
“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.”
Domtar’s principal executive office is in Fort Mill, South Carolina. The Kingsport mill has been downtown since 1916, and its conversion from fine paper to container board production will keep it here for another 100 years, company officials recently said.
Last week, Domtar officials confirmed its management had been in talks with another company about a possible deal.
After the deal closes, Paper Excellence intends to continue the operations of Domtar 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 locations, according to a press release about the acquisition.
“Our Kingsport mill has been sold and changed names several times over many years, and each change has had a positive effect in 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 mill has been here over 100 years and another successful 100 years is in Kingsport’s future.”
The agreement has been unanimously approved by the Domtar board of directors. The transaction is expected to close in the second half of 2021, subject to Domtar shareholder approval, receipt of the required regulatory approvals, and other customary closing conditions.
City Manager Chris McCartt said that after speaking with local Domtar representatives, it was made clear the acquisition will be a positive and strategic move for the company and the mill.
“I was pleased to learn that the mill conversion will continue moving forward, which upon completion will provide competitive jobs, just as the mill has done for over 100 years,” McCartt said.