Mercer Enters Agreement to Acquire Fibrek

Mercer International and Fibrek have reached an agreement whereby Mercer, a manufacturer of market pulp, has agreed to acquire Fibrek Inc., a Montreal-based manufacturer of pulp. 
 

Mercer, British Columbia, operates one market pulp mill in Canada and two market pulp mills in Germany. In total Mercer produces more than 1.5 million air-dried metric tons of kraft pulp per year.
 

Fibrek’s board of directors unanimously determined that it would be in the best interest of the company to support Mercer’s offer, which represents an 81 percent premium to its closing price and a 30 percent premium over an offer made by Resolute Forest Products. 
 

Resolute, which made an unsolicited offer for Fibrek in late November 2011, has since extended its offer to acquire Fibrek until Feb. 23, 2012.
 

“This has been a challenging time for Fibrek as we have sought to maximize value for our shareholders and advance the interests of our other stakeholders. We are pleased to support Mercer's offer and recommend it to our shareholders as we believe this offer meets our goal and provides a significant premium relative to Abitibi's unsolicited offer,” Hubert Lacroix, Fibrek chairman, says.
 

“We had a responsibility to our shareholders to pursue alternative options in their best interests and that is exactly what we have done in supporting this offer from Mercer, a leader in the industry who is committed to market pulp,” Pierre Gabriel Côté, Fibrek president and CEO, adds.
 

“There are significant similarities between Fibrek and Mercer given that we are both pulp producers with a culture of operational excellence,” Côté says.
 

“We are pleased to have the full support of Fibrek's board of directors for a transaction that we believe will deliver significant benefits to both companies’ customers, employees and shareholders. The acquisition of Fibrek clearly fits within our strategy of focusing on world-class production assets that produce high quality pulp. Additionally, the ability of Fibrek's St. Felicien (Quebec) mill to produce and sell surplus renewable energy is in line with our goal of increasing our revenues from energy sales,” Jimmy Lee, Mercer president and CEO, says.
 

“We believe that Fibrek's mills are complementary to our existing operations and we feel that, through active management, the acquisition of Fibrek will generate increased value for our shareholders,” Lee adds.
 

In related news, Fibrek has announced plans to take its Fairmont, W.Va., deinking pulp mill off line for about five weeks, beginning Feb. 20, 2012. The company cited the need to adjust its inventories due to current market conditions as a reason for the closure.
 

Fibrek says the downtime will remove approximately 25,000 metric tons of recycled bleached kraft pulp from the market. The mill has an annual capacity of 215,000 metric tons of recycled pulp.
 

Along with the deinking mill in West Virginia, Fibrek operates a northern bleached softwood kraft pulp (NBSK) mill in Saint Felicien, and a recycled bleached kraft pulp mill in Menominee, Mich. Combined, the three mills have an annual production capacity of 760,000 metric tons per year.