Abitibi-Consolidated Inc. and Bowater Inc. announced a definitive agreement to combine in an all-stock merger of equals.
The combined company, which will be called AbitibiBowater Inc., will have pro forma annual revenues of about $7.9 billion, making it the third largest publicly traded paper and forest products company in North America and the eighth largest in the world.
John Weaver, president and CEO of Abitibi-Consolidated, will be executive chairman of AbitibiBowater, and David Paterson, chairman, president and CEO of Bowater, will be president and CEO of AbitibiBowater.
Under the terms of the transaction, each common share of Abitibi-Consolidated will be exchanged for 0.06261 common share of AbitibiBowater, and each Bowater common share will be exchanged for 0.52 common share of AbitibiBowater.
The combination is expected to generate about $250 million of annualized cost synergies from improved efficiencies in such areas as production, selling, general and administrative costs, distribution and procurement.
AbitibiBowater will own or operate 32 pulp and paper facilities and 35 wood product facilities located mainly in Eastern Canada and the Southeastern U.S. Pro forma combined paper production capacity is about 11.3 million metric tons per year and about 3.1 billion board feet of lumber.