Weyerhaeuser to Combine Fine Paper Business With Domtar
August 2006
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FEDERAL WAY, WA—Aug. 23, 2006—Weyerhaeuser Company (NYSE: WY) today announced that it has reached a definitive agreement to combine its Fine Paper business and related assets with Domtar Inc. (TSE/NYSE: DTC). The transaction gives Weyerhaeuser shareholders 55 percent ownership in the new company and includes a $1.35 billion cash payment to Weyerhaeuser. The cash payment, plus the stock valued at the closing price of Domtar stock on Aug. 22, 2006, results in a transaction value of $3.3 billion before considering resulting synergies.The transaction, which has been approved by the boards of directors of both companies, is expected to close in the first quarter of 2007.
“This transaction will create the North American market leader in fine paper and we anticipate that the combination will generate approximately $200 million in annual synergies within the next two years,” said Steven R. Rogel, chairman, president and chief executive officer. “I’m pleased that Weyerhaeuser shareholders will have the opportunity to participate in value created by this transaction. It’s also good news for our employees in these businesses because the combination of our assets with those of Domtar creates a stronger leader in the paper market. Our employees have created one of the most efficient, low-cost systems in the industry. I know they will play a big role in the future success of the ‘new Domtar.’
“This important milestone transforms Weyerhaeuser into a company with a more focused business portfolio and allows our team to concentrate its full attention on the execution of strategies in our core businesses,” Rogel said. “With this announcement, we can now resume our previously authorized share repurchase program.”
Under the terms of the agreement, Weyerhaeuser will distribute ownership of the Fine Paper business and related assets to Weyerhaeuser shareholders in either a spin-off or split-off transaction. Weyerhaeuser will determine which approach it will take prior to closing the transaction. A spin-off would involve a pro-rata distribution of shares to Weyerhaeuser shareholders. A split-off would provide Weyerhaeuser shareholders the option to elect to exchange Weyerhaeuser shares for stock in the “new Domtar.” Regardless of the method, upon closing of the merger former Weyerhaeuser shareholders will own 55 percent of the “new Domtar.” Former Domtar shareholders will own 45 percent of the new company.
Raymond Royer, Domtar president and CEO, will lead an organization of 14,000 employees with a management team composed of executives from Weyerhaeuser paper operations and Domtar. This team includes Marvin Cooper, Weyerhaeuser senior vice president, Cellulose Fiber & White Paper, Containerboard Manufacturing and Engineering, who will become chief operating officer of the new company. Domtar’s senior vice-president and chief financial officer, Daniel Buron, will be the new company’s chief financial officer.
“This transaction will create the North American market leader in fine paper and we anticipate that the combination will generate approximately $200 million in annual synergies within the next two years,” said Steven R. Rogel, chairman, president and chief executive officer. “I’m pleased that Weyerhaeuser shareholders will have the opportunity to participate in value created by this transaction. It’s also good news for our employees in these businesses because the combination of our assets with those of Domtar creates a stronger leader in the paper market. Our employees have created one of the most efficient, low-cost systems in the industry. I know they will play a big role in the future success of the ‘new Domtar.’
“This important milestone transforms Weyerhaeuser into a company with a more focused business portfolio and allows our team to concentrate its full attention on the execution of strategies in our core businesses,” Rogel said. “With this announcement, we can now resume our previously authorized share repurchase program.”
Under the terms of the agreement, Weyerhaeuser will distribute ownership of the Fine Paper business and related assets to Weyerhaeuser shareholders in either a spin-off or split-off transaction. Weyerhaeuser will determine which approach it will take prior to closing the transaction. A spin-off would involve a pro-rata distribution of shares to Weyerhaeuser shareholders. A split-off would provide Weyerhaeuser shareholders the option to elect to exchange Weyerhaeuser shares for stock in the “new Domtar.” Regardless of the method, upon closing of the merger former Weyerhaeuser shareholders will own 55 percent of the “new Domtar.” Former Domtar shareholders will own 45 percent of the new company.
Raymond Royer, Domtar president and CEO, will lead an organization of 14,000 employees with a management team composed of executives from Weyerhaeuser paper operations and Domtar. This team includes Marvin Cooper, Weyerhaeuser senior vice president, Cellulose Fiber & White Paper, Containerboard Manufacturing and Engineering, who will become chief operating officer of the new company. Domtar’s senior vice-president and chief financial officer, Daniel Buron, will be the new company’s chief financial officer.
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