*NEWS* MERGER WITH WEYERHAEUSER CLEARED

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*NEWS* MERGER WITH WEYERHAEUSER CLEARED

 user 2007-01-15 at 10:56:00 am Views: 65
  • #17182

    Domtar merger with Weyerhaeuser unit cleared
    Canada’s Competition Bureau won’t challenge closing
    January
    , 2007 The proposed merger between Domtar Inc. and a division of
    Weyerhaeuser Co. is exactly what the Canadian forestry industry needs,
    said an analyst with PricewaterhouseCoopers.“We’ve got to get our costs
    down and in order to do that you have to have the scale and some of the
    other synergies that come from these types of deals,” said Craig
    Campbell, Canadian leader of the firm’s forest and paper practice.On
    Tuesday Canada’s Competition Bureau announced it will not challenge the
    closing of the proposed US$3.3-billion merger of forest-products
    producer Domtar with the fine paper and related business division of
    U.S. based Weyerhaeuser.“We are very pleased with these decisions from
    the Canadian and U.S. authorities,” said Raymond Royer, Domtar’s
    president and chief executive officer in a release.“This was an
    essential condition for the transaction. This major step towards
    closing now enables us to seek approval from our shareholders and start
    developing a plan to better meet the needs of customers across North
    America in a competitive marketplace,” added Mr. Royer.Mr. Campbell
    said competition within the North American market is not a serious
    problem for Canadian companies.“Companies need to get bigger,  not just
    in Canada but around the world,” he said.There has been a lot of recent
    merger and acquisition activity being conducted by Canadian forestry
    companies such as Canfor Corp. Tolko Industries Ltd. West Fraser Timber
    Co. Ltd., he said.“They have all been doing deals and the Competition
    Bureau has asked them to divest assets in most of those deals,” he
    said.That increase in activity, which is being mirrored across North
    America and Europe, is partially in response to increased output from
    the Southern hemisphere, where increased production at lower costs is
    putting pressure on markets, he said.“I think the important thing is
    this transaction makes sense when you look at the assets coming
    together,” he said. Creating a larger portfolio of mills and assets
    will make it easier to  evaluate the business from a cost and closure
    point of view, he said.Don Roberts, managing director with CIBC World
    Markets, said the deal wasn’t a surprise in a industry that has seen an
    increase in consolidation in the uncoated free sheet market, the paper
    you put in your photocopier.This type of cross border deal could be
    considered  strategic imperative for organizations in the B.C. interior
    looking to expand their geographic footprint into the U.S., he
    said.First it provide a way for Western companies flush with cash a way
    to get around looming tariffs. It also affords them the ability to grow
    around the impending reductions in the timber harvest levels, caused by
    the pine beetle, in the B.C. interior, he said.In December, Domtar
    announced its intent to sell its 50% stake in Norampac Inc. to Cascades
    Inc. The sale, Norampac is Canada’s largest container board
    manufacturer, is expected to raise about $560-million and will allow
    Domtar to strike about $185-million of debt.