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said Monday it will acquire Canada's

Alliance Forest Products


for roughly $770 million, or C$1.2 billion, including assumed debt.

Bowater will offer C$13 in cash and 0.166 shares of its common stock for each Alliance share, implying a value of C$26 for Alliance's shares.

The board of both companies have approved the merger. Bowater expects the acquisition will add immediately to earnings.

Quebec-based Alliance produces lumber and related products, pulp, newsprint and other paper products. Bowater, based in Greenville, S.C., also manufactures a variety of paper products, market pulp and lumber.

Shares of Bowater were down $1.86, or 4%, to $45.54 in recent

New York Stock Exchange

trading. Shares of Alliance were up $1.24, or 9%, to $15.36.