Mercer International to acquire DMI for $465 million

Mercer International Inc.
October 05, 2018
By Mercer International Inc.
Oct. 5, 2018 – 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 [Daishowa-Marubeni International Ltd.] for consideration of $359.2 million (C$465 million), which includes minimum working capital of $85.7 million (C$111 million).

DMI owns 100 per cent of a bleached kraft pulp mill in Peace River, Alta. (the “PRP Mill”) and has a 50 per cent interest in the Cariboo Pulp and Paper Company (“CPP”), a joint venture which operates a bleached kraft pulp mill in Quesnel, B.C. (the “CPP Mill”).

As a result of this transaction, Mercer’s annual production capacity for pulp will increase by approximately 41 per cent to 2.2 million ADMTs, and surplus energy will increase by approximately 8 per cent to 890,000 megawatt hours.

DMI also holds 20-yeear term renewable governmental Forest Management Agreements and Deciduous Timber Allocations in Alberta with an annual allowable cut of approximately 2.4 million cubic metres of hardwood and 400,000 cubic metres of softwood.

“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,” said David Gandossi, CEO, Mercer International.

“This is a highly strategic transaction for Mercer that leverages our core competencies and is in line with our long-term growth strategies. The transaction positions us to capitalize on identified synergies with Mercer’s existing operations and to create a platform for immediate cash flow generation and earnings accretion. It is an important step in our long term value-add strategy of growing our company in pulp, lumber, energy and extractives,” Gandossi added.

The transaction is subject to customary closing conditions.

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