RICHMOND, BC and MONTREAL (News release) -- The Paper Excellence Group (the "Group"), through its wholly-owned subsidiary Domtar Corporation ("Domtar"), a global diversified manufacturer of pulp and specialty, printing, writing, and packaging papers, and Resolute Forest Products Inc. ("Resolute") (NYSE: RFP) (TSX: RFP), a global forest products company, jointly announced that the Canadian Commissioner of Competition has entered into a consent agreement regarding the parties' business combination. Once the combination has been finalized, Domtar will acquire all of the outstanding common shares of Resolute stock for $20.50 per share and one contingent value right tied to potential duty deposit refunds of up to $500 million.
The consent agreement filed by the Canadian Commissioner of Competition with the Competition Tribunal today completes one of the remaining conditions to the closing of the transaction.
The transaction remains on course to close in the first half of 2023, subject to the satisfaction or waiver of the other conditions to the closing of the merger.
A Bureau review concluded that the proposed transaction would likely lessen competition substantially in the supply of northern bleached softwood kraft (NBSK) pulp in Eastern and Central Canada and in the purchase of wood fibre from private lands in northwestern Ontario.
The Bureau determined that Domtar and Resolute account for a significant portion of the supply of NBSK in Eastern and Central Canada. The proposed transaction would result in market shares well above the 35% threshold established in the Bureau's Merger Enforcement Guidelines. The Bureau established that substantial obstacles exist to new entry in the market, or expansion of an existing mill. As well, the Bureau determined that the proposed transaction would likely provide Domtar with monopsony power in northwestern Ontario and enable Domtar to pay lower than competitive prices to suppliers of wood fibre.
To resolve the Bureau's concerns, Domtar Corporation has agreed, post-transaction, to sell its Dryden pulp mill and Thunder Bay pulp and paper mill to two independent purchasers approved by the Commissioner of Competition.
The Commissioner is satisfied that the sale of the Dryden pulp mill and Thunder Bay pulp and paper mill will resolve the competitive issues arising from the proposed transaction.