Canadian pulp-and-paper producer Paper Excellence has agreed to purchase Domtar Corp. (TSX:UFS) (NYSE:UFS) in a $2.8 billion U.S. all-cash deal.
Paper Excellence will pay $55.50 U.S. per Domtar share in the transaction, the Richmond, British Columbia-based company said in a news release. That represents a 37% premium to Domtar’s stock price. The deal will enable Paper Excellence to expand into the U.S. market, the company said.
The deal comes as the paper industry is recovering from last year’s drop in demand, when the global pandemic reduced the need for paper products at offices and schools, with many people working from home. The price of pulp, a by-product of wood and a key ingredient in papermaking, has soared this year along with lumber.
Domtar is North America’s largest manufacturer of uncoated paper and one of the world’s largest manufacturers of pulp. Paper Excellence, which makes pulp packaging and specialty paper, said it intends to continue Domtar’s operations as a standalone business, retaining its management team and corporate and production locations.
The transaction has been unanimously approved by Domtar’s Board of Directors.
