New York, New York, USA 03 October 2018 -- Mercer International Inc. (Nasdaq: MERC) today announced that it has entered into an agreement with Marubeni Corporation, Nippon Paper Industries Co., Ltd., and Daishowa North America Corporation to acquire all of the issued and outstanding shares of DMI for consideration of $359.2 million (C$465 million), which includes minimum working capital of $85.7 million (C$111 million).
DMI owns 100% of a bleached kraft pulp mill in Peace River, Alberta (the "PRP Mill") and has a 50% interest in the Cariboo Pulp and Paper Company ("CPP"), a joint venture which operates a bleached kraft pulp mill in Quesnel, British Columbia (the "CPP Mill").
As a result of this transaction, Mercer's annual production capacity for pulp will increase by approximately 41% to 2.2 million ADMTs, and surplus energy will increase by approximately 8% to 890,000 MWhs.
Further, the acquisition of DMI will add NBHK pulp to Mercer's current product mix as well as provide the Company with an expanded market presence in Asia.
DMI also holds 20-year term renewable governmental Forest Management Agreements and Deciduous Timber Allocations in Alberta with an Annual Allowable Cut ("AAC") of approximately 2.4 million cubic meters of hardwood and 400,000 cubic meters of softwood.
The transaction is subject to customary closing conditions, including receipt of requisite regulatory antitrust approvals. In connection therewith, Mercer has arranged a fully committed financing in the amount of US$350 million to finance the acquisition. The transaction is expected to close in the fourth quarter of 2018.
Sangra Moller LLP acted as legal advisor for Mercer and Credit Suisse provided the committed financing for the transaction.
is a modern, high performance swing mill with an annual production capacity of approximately 475,000 ADMT of bleached hardwood and softwood kraft pulp;
holds Provincial Forest Management Agreements ("FMA") and Deciduous Timber Allocations ("DTA") in Alberta with 20-year terms which provide it with an ACC for hardwood of approximately 2.4 million cubic meters from province-owned forests through the FMAs and DTAs, and has rights to harvest 400,000 cubic meters of softwood through the FMAs;
includes a bio-mass fueled cogeneration power plant, comprised of two turbines: a back pressure turbine with a capacity of 40 MW which generates power for the PRP Mill's pulp production, and a condensing turbine generator with a capacity of 25 MW, which is used to generate electricity for sale to the Alberta electrical grid; and
has an experienced workforce of approximately 280 employees.
is a joint venture in which DMI has a 50% interest;
has an annual production capacity of approximately 340,000 ADMT of NBSK pulp;
includes a bio-mass fueled cogeneration power plant, comprised of two turbines: a back pressure turbine with a capacity of 32 MW which generates power for the CPP Mill's pulp production, and a condensing turbine generator with a capacity of 25 MW, which is used to generate electricity for sale to the BC utility; and
has an experienced workforce of approximately 305 employees.
We believe the acquisition of DMI and the integration of the acquired mills with Mercer's existing operations will generate material operating synergies in the range of approximately $15 to $20 million per year, primarily through procurement opportunities, cost benefits, optimization of logistics and geographic market mix through an expanded number of mill locations. We currently expect to achieve the majority of such synergies within 12 months of closing of the transaction.