Each issue of PaperMoney is approximately 500 fact filled pages.
Logout
Click here for Pulp & Paper Radio International
Items just for you
New publication added! Advertising Arguments 2015 book
Free Downloads
Search
My Profile
Login
Management Side
Technical Side
Weyerhaeuser to Combine Fine Paper, Papergrade Pulp, Related Assets With Domtar
Print
Federal Way, Washington, USA, 23 August 2006 -- /PRNewswire/ -- Weyerhaeuser Company (NYSE:WY) today announced that it has reached a definitive agreement to combine its Fine Paper business and related assets with Domtar Inc. (TSE/NYSE: DTC). The transaction gives Weyerhaeuser shareholders 55% ownership in the new company and includes a USD 1.35 billion cash payment to Weyerhaeuser. The cash payment, plus the stock valued at the closing price of Domtar stock on 22 August 2006, results in a transaction value of USD 3.3 billion before considering resulting synergies.

The combination is expected to be tax-free for Weyerhaeuser and its shareholders for U.S. federal income tax purposes. The transaction, which has been approved by the boards of directors of both companies, is expected to close in the first quarter of 2007.

"This transaction will create the North American market leader in fine paper and we anticipate that the combination will generate approximately $200 million in annual synergies within the next two years," said Steven R. Rogel, chairman, president and chief executive officer. "I'm pleased that Weyerhaeuser shareholders will have the opportunity to participate in value created by this transaction. It's also good news for our employees in these businesses because the combination of our assets with those of Domtar creates a stronger leader in the paper market. Our employees have created one of the most efficient, low-cost systems in the industry. I know they will play a big role in the future success of the 'new Domtar,'" he said.

"This important milestone transforms Weyerhaeuser into a company with a more focused business portfolio and allows our team to concentrate its full attention on the execution of strategies in our core businesses," Rogel said. "With this announcement, we can now resume our previously authorized share repurchase program."

Under the terms of the agreement, Weyerhaeuser will distribute ownership of the Fine Paper business and related assets to Weyerhaeuser shareholders in either a spin-off or split-off transaction. Weyerhaeuser will determine which approach it will take before closing the transaction. A spin-off would involve a pro-rata distribution of shares to Weyerhaeuser shareholders. A split-off would provide Weyerhaeuser shareholders the option to elect to exchange Weyerhaeuser shares for stock in the "new Domtar." Regardless of the method, upon closing of the merger former Weyerhaeuser shareholders will own 55% of the "new Domtar." Former Domtar shareholders will own 45% of the new company.

Raymond Royer, Domtar president and chief executive officer, will lead an organization of 14,000 employees with a management team composed of executives from Weyerhaeuser paper operations and Domtar. This team includes Marvin Cooper, Weyerhaeuser senior vice president, Cellulose Fiber and White Paper, Containerboard Manufacturing and Engineering, who will become chief operating officer of the new company. Domtar's senior vice-president and chief financial officer, Daniel Buron, will be the new company's chief financial officer. The "new Domtar" will have its head office in Montreal, Quebec, Canada, while the headquarters of operations will be in Fort Mill, South Carolina, USA.

Harold MacKay, counsel and formerly chairman and senior partner to the Regina, Saskatchewan law firm of MacPherson Leslie & Tyerman LLP and an international advisor to Weyerhaeuser's board of directors, will chair a 13-member board -- seven nominated by Weyerhaeuser, six by Domtar. MacKay will resign his Weyerhaeuser advisory role before becoming chairman.

"With this transaction, we are transforming Domtar into one of the world's leading paper companies, creating a strong company for shareholders and presenting new opportunities for employees and customers," Royer said. "We are proactively enhancing the quality of our asset mix and taking decisive action to assure our future in a consolidating industry. This compelling strategic and operational fit will make the 'new Domtar' financially stronger, with prominent brands, a lower cost base, and the necessary scale and scope to succeed in the highly competitive global marketplace."

Weyerhaeuser manufacturing assets included in the combination include

-- Eight paper mills and associated pulp mills (Dryden, Ontario; Hawesville, Kentucky.; Johnsonburg, Pennsylvania; Kingsport, Tennessee; Bennettsville, South Carolina; Plymouth, North Carolina; Prince Albert, Saskatchewan; Rothschild, Wisconsin).
-- 14 converting centers (Brownsville, Tennessee; Cerritos, California; Dallas, Texas; DuBois, Pennsylvania; Indianapolis, Indiana; Langhorne, Pennsylvania; Mira Loma, California; Owensboro, Kentucky; Plymouth, North Carolina; Prince Albert, Saskatchewan; Ridgefields, Tennessee; Rock Hill, South Carolina; Tatum, South Carolina, Washington Court, Ohio).
-- The market pulp mill at Kamloops, British Columbia.
-- The coated groundwood mill in Columbus, Mississippi.
-- Two softwood lumber mills (Big River, Saskatchewan; Ear Falls,
Ontario).

The transaction is subject to review by antitrust agencies and securities regulators in the United States and Canada, the receipt of a favorable tax ruling from the U.S. Internal Revenue Service, and other customary closing conditions. It is also subject to approval by Domtar shareholders.

Weyerhaeuser and Domtar will continue to operate separately until the transaction closes.

Weyerhaeuser's financial advisor on the transaction was Morgan Stanley & Co. Inc. Its legal advisor in the United States was Cravath, Swaine & Moore LLP. Blake, Cassels & Grayson acted as Weyerhaeuser's Canadian legal advisor.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest integrated forest products companies, was incorporated in 1900. In 2005, sales were USD 22.6 billion. It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development, and related activities. Additional information about Weyerhaeuser's businesses, products and practices is available at http://www.weyerhaeuser.com/ .



Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: