Paperexcellence, a Canadian paper and packaging company, is looking for a deal to buy Domtar, a US rival, according to people familiar with the matter, Bloomberg reported.
The two companies are working with consultants to conduct a potential deal that will privatise Domtar, people familiar with the matter said. The intermediate price of paperexcellence’s acquisition of Domtar is about $50 a share. On Monday, Domtar shares rose to $40.52, with a market capitalization of about $2 billion.
Domtar dates back to a British wood company founded in 1848, one of the largest producers of cultural paper in North America. The company plans to start box board production by the end of 2022, and is converting a cultural paper machine at Kingsport to a 545000 ton recycled packaging machine.
After Bloomberg reports, Domtar said it acknowledged that management had been discussing the possibility of a deal with paperexcellence. But the current discussions do not mean that the deal will be reached.
According to keybanc, Domtar is unlikely to see a higher bid than paperexcellence.
According to reports, paperexcellence’s bid estimates Domtar at about six times the EBITDA estimate in 2021, compared with Domtar’s historical trading price of about five times that of EBITDA, keybanc analyst adamjosephson wrote in a report.
He pointed out that, although China’s pulp prices are “volatile,” any potential bid for domatar will appear when China’s pulp prices are “near the record high in history.”.
In January, RBC predicted a major merger in packaging and paper this year and considered packagingcorp. or westrock as a potential buyer for Domtar.
On February 4, paperexcellence announced that the arbitration court of the Brazilian international chamber of Commerce (ICC) ruled that it had made a decision in support of paperexcellence in a case of J & finvestimetossa (parent company of eldoradobrasilcelulose). According to the ruling, paperexcellence may continue to acquire all remaining shares in eldoradobrasil. Upon completion of the acquisition, it will hold 100% of eldoradoo.
Paperexcellence is affiliated to the world’s largest paper enterprise, Indonesia app, which was registered in the Netherlands in 2008, specializing in the production of wood pulp for paper making, and has production plants in Canada, France and other places. Pulp and paper mills are in Canada and France, and with the merger of Eldorado, paperexcellence will have about 7000 employees worldwide with an annual capacity of 5.3 million tons of pulp and paper.
Post time: May-11-2021