Mercer International Inc. has entered into an agreement with Marubeni Corporation, Nippon Paper Industries Co., Ltd., and Daishowa North America Corporation to acquire all of the issued and outstanding shares of DMI for consideration of $359.2 million, which includes minimum working capital of $85.7 million.
DMI owns 100% of a bleached kraft pulp mill in Peace River, Alberta and has a 50% interest in the Cariboo Pulp and Paper Company , a joint venture which operates a bleached kraft pulp mill in Quesnel, British Columbia.
As a result of this transaction, Mercer's annual production capacity for pulp will increase by approximately 41% to 2.2 million ADMTs, and surplus energy will increase by approximately 8% to 890,000 MWhs.
Further, the acquisition of DMI will add NBHK pulp to Mercer's current product mix as well as provide the Company with an expanded market presence in Asia.
DMI also holds 20-year term renewable governmental Forest Management Agreements and Deciduous Timber Allocations in Alberta with an Annual Allowable Cut ("AAC") of approximately 2.4 million cubic meters of hardwood and 400,000 cubic meters of softwood.
The transaction is subject to customary closing conditions, including receipt of requisite regulatory antitrust approvals. In connection therewith, Mercer has arranged a fully committed financing in the amount of $350 million to finance the acquisition. The transaction is expected to close in the 4Q 2018.
Mr. David M. Gandossi, CEO, stated: "The proposed acquisition significantly increases our current operations in Canada and, in particular, will complement Mercer's Celgar pulp mill in British Columbia. The acquisition will additionally strengthen our presence in Asia, which we have identified as an important strategic area, and it will expand our product offering to include northern bleached hardwood kraft pulp, a product that we believe is following the same tightening market path that NBSK has experienced during the past few years."
Mercer International Inc. is a global wood products manufacturing company.
