Paper Excellence Group signs deal to buy Resolute Forest Products

Cedar planks are stacked at a lumber yard in Montreal, Tuesday, April 25, 2017. The Paper Excellence Group has signed a deal to buy Resolute Forest Products Inc. in an agreement that values the company at US$2.7 billion. THE CANADIAN PRESS/Paul Chiasson

The Paper Excellence Group has signed a deal to buy Resolute Forest Products Inc. in an agreement that values the company at US$2.7 billion.

Patrick Loulou, chief strategy officer of the Paper Excellence Group, said Resolute is an ideal fit for the company's long-term growth strategy.

"It complements our existing pulp, paper and packaging businesses and adds capabilities in lumber and tissue," Loulou said in a statement.

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.

Resolute shares were up C$10.46 at C$26.69 in trading on the Toronto Stock Exchange.

Paper Excellence bought Domtar last year in a deal that valued the company at about US$3 billion.

The company said Wednesday Resolute will become a wholly owned subsidiary of Domtar and continue to operate on a business-as-usual basis under the Resolute name.

Resolute's management team will also remain in place at the company's headquarters.

Resolute CEO Remi Lalonde said the deal will help growth as the company gains access to more tools, capital and opportunities with the combined resources of the Paper Excellence Group.

"Together, we will form a stronger and more resilient, diversified forest products company, positioned to compete on a truly global scale, with a shared commitment to being a trusted business partner, dedicated to sustainability and to caring for its people and communities," Lalonde said in a statement.

Resolute sells a diverse range of products, including market pulp, tissue, wood products and papers. It owns or operates some 40 facilities, as well as power generation assets, in the United States and Canada.

The deal is subject to shareholder and regulatory approvals as well as other customary closing conditions. It is expected to close in the first half of next year.

Fairfax Financial Holdings Ltd., which holds a 40 per cent stake in Resolute, has agreed to to vote its shares in favour of the transaction.

- This report by The Canadian Press was first published July 6, 2022.