Paper Excellence Group is set to expand in Canada’s forestry industry now that its acquisition of Resolute has been approved. In the past, Paper Excellence has been primarily focused on the Pulp and Paper industry. However, with this new acquisition, there’s a new opportunity to diversify into the lumber sector.
Wood products such as softwood lumber accounted for nearly 45% of Resolute’s revenue from Canadian and US operations in the first nine months of 2022. The acquisition will help Paper Excellence seamlessly expand into this market and grow their operations.
During the first week of January, Canada’s Competition Bureau announced that it had approved the proposed acquisition of Resolute – subject to certain conditions. Specifically, that Paper Excellence’s wholly owned Domtar Corp. division had to sell its pulp mill in Dryden, Ontario and divest Resolute’s pulp and paper mill in Thunder Bay.
Canada’s Competition Bureau stated that these conditions were necessary to prevent Paper Excellence from gaining too strong of a foothold in northwestern Ontario. The agreement also stipulated that two separate buyers will be required for the Dryden and Thunder Bay mills.
This week, Paper Excellence said that is fully committed to its US$1.6 billion bid for Resolute. While lumber prices have slid since the summer, Paper Excellence said it is taking a long-term view. According to a Paper Excellence representative, "We see growth opportunities in the North American market, as housing construction will continue to drive demand for lumber. We also have the resources to convert less-profitable operations to respond to emerging market needs."
According to FisherSolve, Resolute’s Thunder Bay mill produces over a half million tons of newsprint and market pulp annually. The mill contains one big 338-inch paper machine and an idled machine, in addition to pulp dryers. The mill’s fiber lines make both mechanical and kraft pulp. In 2013, the mill installed a large 65 MW condensing turbine.
Regarding Domtar’s Dryden mill, FisherSolve reports that it currently has one operating pulp dryer as well as one operating fiber line. The mill produces about 350,000 tons of softwood market pulp.
In such a capital-intensive industry, the decisions made, no matter how big or small, can have substantial consequences. Therefore, it is critical for buyers to be informed and understand their competitive position, as well as the mills’ potential, before making any major moves.
Fisher International provides unparalleled business intelligence, combined with expert guidance, for pulp and paper professionals worldwide. We help you make informed and precise decisions faster and more efficiently.
When it comes to these two newly presented opportunities, it’s crucial to be diligent with your decision-making and imperative to have all the necessary data needed. Fisher International can provide you with:
For more information on the extensive insight Fisher’s consulting services can provide for you regarding this massive opportunity, contact us today.