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Mercer International inc. to acquire Daishowa-Marubeni International ltd.significantly expanding its pulp operations

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DMI owns and operates a swing NBSK and NBHK pulp mill in Peace River, Alberta, and has a 50% interest in a NBSK pulp mill in Quesnel, British Columbia.

  • Consideration of $359.2 million (C$465 million), which includes minimum working capital of $85.7 million (C$111 million)
  • Pulp mills to be acquired have a combined pulp production capacity of 645,000 ADMTs, which is comprised of the Peace River pulp mill with 475,000 ADMTs and 50% of the Quesnel pulp mill, with 170,000 ADMTs
  • Post-acquisition, Mercer will have a combined annual production capacity of approximately 2.2 million ADMTs of pulp and approximately 890,000 MWh of surplus energy
  • For the first eight months of 2018, DMI had combined1 Revenues of approximately $320.3 million, Net Income of approximately $42.2 million, and EBITDA of approximately $90.7 million
  • For the fiscal year 2017, DMI had Revenues of approximately $351.6 million, Net Income of approximately $8.2 million, and EBITDA of approximately $55.3 million
  • Immediately accretive transaction which advances the Company’s long term strategy of growing its business in pulp, lumber, energy and extractives

Mercer International Inc. today announced that it 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 for consideration of $359.2 million (C$465 million), which includes minimum working capital of $85.7 million (C$111 million).
DMI owns 100% of a bleached kraft pulp mill in Peace River, Alberta (the "PRP Mill") and has a 50% interest in the Cariboo Pulp and Paper Company ("CPP"), a joint venture which operates a bleached kraft pulp mill in Quesnel, British Columbia.

As a result of this transaction, Mercer’s annual production capacity for pulp will increase by approximately 41% to 2.2 million ADMTs, and surplus energy will increase by approximately 8% to 890,000 MWhs.
Further, the acquisition of DMI will add NBHK pulp to Mercer’s current product mix as well as provide the Company with an expanded market presence in Asia. DMI also holds 20-year term renewable governmental Forest Management Agreements and Deciduous Timber Allocations in Alberta with an Annual Allowable Cut of approximately 2.4 million cubic meters of hardwood and 400,000 cubic meters of softwood.
The transaction is subject to customary closing conditions, including receipt of requisite regulatory antitrust approvals. In connection therewith, Mercer has arranged a fully committed financing in the amount of US$350 million to finance the acquisition. The transaction is expected to close in the fourth quarter of 2018.
Sangra Moller LLP acted as legal advisor for Mercer and Credit Suisse provided the committed financing for the transaction.

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