Canada's Paper Excellence to buy Resolute Forest Products in $2.7 billion deal
(Reuters) - Canada's Paper Excellence, through its U.S. unit Domtar, agreed to buy Resolute Forest Products Inc on Wednesday in a deal valued at about $2.7 billion, sending the U.S.-listed shares of Resolute up by 65% before the bell.
Paper Excellence will pay $20.5 per Resolute share, representing a premium of about 64% to the company's closing price on Tuesday.
The deal is the latest move from the Richmond, British Columbia-based Paper Excellence to expand its footprint in North America, having completed the buyout of U.S. rival Domtar last year.
The Montreal, Quebec-based Resolute which makes market pulp, tissue, wood products and paper was formed by the merger of North American forestry groups Bowater and Abitibi in 2007.
Resolute shareholders will also each receive one contingent value right per share that entitles the holder to a portion of future softwood lumber duty refunds, over which Canada and the United States are currently in a dispute, on about $500 million of deposits paid by Resolute through June 30.
The deal, expected to close in the first half of 2023, will be carried out by way of a merger of Resolute with Domtar and would retain Resolute's production locations and jobs, Paper Excellence said in a statement.
Barclays is advising Paper Excellence for the deal, while CIBC Capital Markets is the financial advisor to Resolute.
(Reporting by Rithika Krishna in Bengaluru; Editing by Krishna Chandra Eluri)
