One of South Carolina's largest publicly traded companies has agreed to be sold to a Canadian rival in a deal that will take it private.
Fort Mill-based Domtar Corp. will be operated as standalone business after the estimated $3 billion all-cash acquisition by Paper Excellence closes later this year.
"As such, Domtar will continue to be led by its management team, and Paper Excellence plans to retain its corporate and production locations," according to a written statement issued May 11.
In a recorded message to workers, the company addressed the uncertainty that often follows a merger announcement. It stressed that "very little” will change in the short term.
"There are no facility closures planned. Our offices in Montreal and Fort Mill will remain as they are. There are no layoffs anticipated. The Domtar name, our organizational structure, our management team, our manufacturing assets, our customers, our suppliers — all stay the same. ... We will continue to be a Delaware-registered U.S. corporation, with our own balance sheet, owned by the Paper Excellence family," according to a transcript of the recording filed with stock market regulators.
Domtar stockholders will receive $55.50 a share, a 37 percent increase from May 3, the day before the South Carolina pulp and paper maker confirmed the companies were engaged in merger discussions.
“This agreement enables our shareholders to realize certain and immediate cash value at a significant premium for their shares,” Domtar CEO John D. Williams said in a written statement. “This transaction validates our long-term strategic plan for our leading paper and pulp businesses, and for our continued expansion into packaging.”
Domtar has a long history that dates back to the 1840s, and it maintains strong ties to Canada, where it was incorporated in 1929 as Dominion Tar and Chemical. It has kept its U.S. headquarters in the Palmetto State since about 2007, when it acquired a paper business that was based in Fort Mill.
Domtar employs about 6,600 workers and operates 23 manufacturing plants in North America, including a mill in Bennettsville and two paper converting plants in Rock Hill and Marlboro County. With $3.65 billion in revenue last year, it is South Carolina's second-largest public company behind Sonoco Products based on that measurement.
The acquisition will expand Paper Excellence's footprint beyond its eight Canadian manufacturing locations.
“This marks a major step in our global strategy of identifying well-positioned assets and positioning them for growth," said Joe Ragan, chief financial officer.
The British Columbia-based company is "enthusiastic about entering" the U.S. market, he added.
Domtar's paper revenue took a 16 percent hit last year after COVID-19 pandemic shut down offices and schools worldwide.
In response, the company mapped outa $200 million cost-cutting plan that eliminated about 750 jobs. It also announced it will invest up to $350 million to make cardboard packaging — a new product line for Domtar — at a Tennessee mill and it sold off a subsidiary that made absorbent personal-care fabrics to focus on its core paper and pulp business.
The company said its board has unanimously approved the sale to Paper Excellence. Shareholders will vote on it later this year.
Domtar's stock, which trades in the U.S. under the symbol UFS, jumped nearly 17 percent to close at $55.38, just 12 cents shy of the buyout price.