The Competition Bureau said Thursday that it has approved with conditions the acquisition of Resolute Forest Products by Domtar, a wholly-owned subsidiary of Excellence Paper of British Columbia.
The office says it has entered into a “consent” with Domtar to address competition concerns arising from the proposed acquisition, which values the company at $2.7 billion.
The Competition Bureau believes that the proposed transaction “would likely have the effect of substantially lessening competition in the supply of bleached softwood kraft pulp in eastern and central Canada, and in the purchase of from private land in northwestern Ontario”.
To resolve the bureau’s concerns, Domtar agreed to sell, post-acquisition, its Dryden pulp mill and Thunder Bay pulp and paper mill “to two independent buyers approved by the Commissioner of Competition.”
The three companies announced on Wednesday that Domtar would acquire the outstanding common stock of Resolute for US$20.50 per share, in addition to a conditional right to value tied to potential repayments of rights deposits of up to of 500 million.
The transaction is expected to close in the first half of 2023, subject to the satisfaction or waiver of other conditions to closing the merger, it was reported on Wednesday.
The transaction would make Papier Excellence a major player in the forest industry in Quebec. Resolute (formerly AbitibiBowater) would become a subsidiary of the Domtar Group, which also became part of British Columbia firm Papier Excellence last year.
When the transaction was announced last July, Resolute’s CEO, Rémi G. Lalonde, said that Papier Excellence had made a commitment that Resolute would continue to operate under the same name and that the management would remain at the head office in Montreal.
“Papier Excellence made a commitment that Montreal would become an important hub for its operations in North America,” assured Mr. Lalonde in an interview.
He then pleaded that the company would have access to more financial resources. He cited the Resolute newsprint mill in Gatineau as an example: the agreement provides for the completion of a feasibility study for its conversion to a packaging paper production plant.