*NEWS* MERGER WITH WEYERHAEUSER CLEARED

[Anonymous]

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. 

[Author]

January 15, 2007 at 10:56 AM