Domtar, Weyerhaeuser Merger Creates Paper Giant

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Domtar Inc. signed a definitive agreement to merge with Weyerhaeuser Company's fine paper business and related assets. The deal, announced Aug. 23, creates the largest manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world.

A new Domtar will be created incorporating Weyerhaeuser's 7 U.S. and 3 Canadian pulp and paper mills, two sawmills and converting, forming and warehousing facilities for stock and a cash payment of $1.35 billion. At the time of the closing, which is expected to take place in the first quarter of 2007, the combined company will be owned approximately 55 percent by former Weyerhaeuser shareholders and 45 percent by former Domtar shareholders.

The transaction will more than double Domtar's current paper production capacity, provide it with an expanded North American reach and increase its depth of product offerings. The new company will maintain the environmental commitment displayed by both Domtar, www.domtar.com, Montreal, and Weyerhaeuser, www.weyerhaeuser.com, Federal Way, WA, through added capacity to expand its environmentally and socially responsible papers such as the EarthChoice product line.

The backbone of the new company will be six uncoated freesheet mills that will provide two-thirds of its 5 million tons of capacity. These mills, combined with a mix of specialty facilities, will make the company one of the most efficient and cost-competitive paper companies in North America, according to Domtar. The new company will generate approximately $6.5 billion in sales, Domtar estimates.

The new Domtar will be headquartered in Montreal while its headquarters of operations will be in Fort Mill, SC. Raymond Royer, Domtar's current president/CEO, will lead the company in the same capacity.

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