Paper giant sells forest products arm

Domtar Corp. of Montreal, the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second-largest in the world, agreed to sell its forest products business to Vancouver-based Eacom Timber Corp. for an estimated $120 million.

Domtar will receive 19 percent of the proceeds in shares of Eacom. The transaction was announced March 29 and is expected to close by the end of the second quarter of 2010, subject to material consents and customary closing conditions.

"Our forest products employees have demonstrated tremendous resilience throughout the years," said John D. Williams, president and CEO of Domtar Corp., in a statement. "Their sustained efforts to reduce costs and pursue the continuous improvement of operations have positioned the business well for the recovery. All Domtar forest products employees and its management team, currently led by Jean-François Mérette, will be transitioning to Eacom. Eacom will establish its headquarters in Montreal and will become one of the largest publicly traded lumber producers in Eastern Canada. The company will be a focused, well-capitalized, stand-alone operation dedicated to the manufacturing of solid and value-added wood products."

The transaction includes five operating sawmills in Ontario and two in Quebec, as well as two non-operating sawmills. The sawmills have approximately 3.5 million cubic meters of annual harvesting rights and a production capacity of close to 900 million bf. Several smaller entities are also involved in the purchase.

"With this acquisition we pursue our vision of becoming a major softwood lumber producer and we look forward to integrating Domtar's leading wood products management team to ensure a smooth transition," says Rick Doman, president and CEO of Eacom Timber Corp. "We recognize that customers have choices in wood products suppliers and we will work hard to secure their business, notably through our continued commitment to the FSC certification."

Eacom Timber Corp. is a new entry into the forestry sector and currently owns one idle mill in Big River, Saskatchewan, which it acquired at the beginning of 2010.

This article originally appeared in the May 2010 issue.