Paper Excellence Explores Deal to Take Domtar Private

Canadian paper and packaging company Paper Excellence is exploring a deal to acquire U.S. rival Domtar Corp., according to people familiar with the matter. Domtar rose as much as 21% in after-market trading.

The companies are working with advisers on a potential transaction that would take U.S.-listed Domtar private, said the people, who asked not to be identified because the details aren’t public. A deal could value Domtar’s shares in the mid-$50s, one of the people said. No final decision has been made and talks could fall through.

Domtar, based in Fort Mill, South Carolina, closed regular trading up 2.8% at $40.52 in New York Monday, giving the company a market value of about $2 billion.

A representative for Domtar declined to comment. Representatives for Paper Excellence didn’t immediately respond to requests for comment.

Domtar, which traces its roots to a British timber company founded in 1848, is one of North America’s top producers of so-called freesheet paper, which is used for everything from business memos to copy paper.

In January, it agreed to sell its personal care business to American Industrial Partners for $920 million. Domtar, with 2020 sales of about $3.7 billion, was added to the S&P SmallCap 600 index last month, after Chief Executive Officer John Williams returned from a temporary medical leave in March, after recovering from Covid-19.

Paper Excellence, based in Richmond, British Columbia, manufactures pulp packaging and specialty paper and has eight facilities in Canada, according to its website. The company also owns about a 49% stake in a mill located in Tres Lagoas in Brazil.

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