THUNDER BAY, ONT. — Resolute Forest Products Inc. is set to be in new hands after the Paper Excellence Group signed a deal to purchase the company valued at US$2.7 billion.
Under the proposed deal, Resolute would become a completely owned subsidiary of Domtar, while continuing to operate on a business-as-usual basis under the Resolute name. Domtar was purchased by the Paper Excellence Group in 2021.
Fitting into the Paper Excellence Group’s long-term growth strategy, Resolute will complement its existing pulp, paper and packaging businesses while adding capabilities in lumber and tissue. Resolute owns or operates about 40 facilities, including power generation assets, in Canada and the U.S. It produces and markets a diverse range of products, including market pulp, tissue, wood products and papers. Thunder Bay’s plant, a leader in pulp and paper production, will play a significant role in the developing strategy.
“Thunder Bay is an outstanding asset that we believe has a very bright future,” said Seth Kursman, vice-president of corporate communications, government affairs and sustainability with Resolute Forest Products.
“And we believe that before the announcement of the transaction, and we certainly believe it after the transaction. Paper Excellence has expressed a strong interest in our lumber business because that’s something that’s new for them, and certainly, the Thunder Bay pulp and paper mill is viewed as an excellent asset and one which is very attractive, to invest into in the future.”
Kursman says there are great opportunities ahead for Resolute and the Thunder Bay operations, which will ultimately be recognized on a global scale.
“We produce paper, tissue and lumber now, and Domtar produces very different papers,” he said.
“They are also going very big in packaging. They produce a number of different pulp products. When you consider that we’re going to be part of a larger organization that is very likely going to be one of the top 10 largest forest products companies in the world, that tells you that there’s going to be a broader product offering. We’re going to be a premier diversified forest products company now able to operate on a truly global scale.”
Kursman added that the deal is terrific news for their employees, including the socioeconomic sustainability and wellbeing of the communities in which they operate.
Meanwhile, the deal is subject to shareholder and regulatory approvals as well as other customary closing conditions and is expected to close in the first half of next year. Fairfax Financial Holdings Ltd. holds a 40-per cent stake in Resolute and has agreed to vote its shares in favour of the transaction.
Paper Excellence bought Domtar last year in a US$3 billion deal in 2021.
Under the proposal, the parent company of Domtar Corp. will pay US$20.50 per Resolute share, a 64 per cent premium to the share’s closing price on Tuesday. Resolute shareholders will also receive a contingent value right that entitles the holder to a share of future softwood lumber duty refunds on approximately US$500 million of deposits paid by Resolute through June 30.