Domtar (UFS) - Get Report shares surged Tuesday after the maker of fiber-based products for communications, packaging and other applications definitively agreed to be acquired by Paper Excellence for $55.50 a share cash.
The deal price is a 37% premium to Domtar’s closing price on May 3, the date when Bloomberg News, citing people familiar with the matter, reported that the two sides were in deal talks.
The enterprise value of the deal is about $3 billion.
Shares of the Fort Mill, S.C., company at last check rose 15% to $54.44.
Paper Excellence is the privately held Richmond, British Columbia, producer of pulp as well as paper for a variety of uses.
“We are enthusiastic about entering the American market" via the deal, Paper Excellence Chief Financial Officer Joe Ragan said in a statement.
Domtar's board approved the terms. The transaction is expected to close in the second half of 2021, subject to conditions including regulatory clearances and a vote of Domtar holders.
"This transaction validates our long-term strategic plan for our leading paper and pulp businesses and for our continued expansion into packaging," John D. Williams, president and chief executive of Domtar, said.
Barclays is financial adviser to Paper Excellence, while Morgan Stanley is advising Domtar.
On May 6 Domtar reported that it swung to a first-quarter net loss of 54 cents a share from a profit of 9 cents a share in the year-earlier quarter. Revenue totaled $944 million, down 8.4% from $1.03 billion.