ForesterBlog.com
This news caught my eye because Mercer International operates a pulp mill in Castlegar BC, close to where I live. They also have two mills in Germany, and it looks like they are now ready to expand. Fibrek, the company they seek to acquire, has three mills in Quebec, West Virginia and Michigan.
Another interesting aspect of this deal is that there was another competing bid for Fibrek valued at $130 Million. Mercer's offer provides a significant premium at $170 Million. The pulp business to me is a difficult one, it's very capital intensive but this also acts as a barrier to competition. For Mercer to build three new pulp mills would have cost a lot more in time and money than their bid to buy Fibrek, so for them I think it will be a good deal. Especially since they are already very experienced in the pulp market. This deal is also a sign that the future might be good for pulp, since companies in this industry are looking to expand.
Mercer International isn't a household name, but they are important to the Castlegar and Kootenay areas of BC for the mill and forestry jobs they provide or create, and the taxes they pay to local government. To see Mercer in a position to expand and grow is a good sign for the people in these areas.
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Pulp producer Fibrek Inc. says it has struck a friendly $170 million deal to be acquired by Vancouver-based Mercer International Inc.
Mercer Inc. operates in the pulp business and produces market northern bleached softwood kraft, or 'NBSK', pulp for export around the world. The company employs nearly 1,500 people and has a mill in British Columbia's interior, and two in eastern Germany.
Mercer president and chief executive Jimmy Lee welcomed the deal and said it benefits both pulp makers, their 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," Lee said in a release.
"Additionally, the ability of Fibrek's St. Felicien mill to produce and sell surplus renewable energy is in line with our goal of increasing our revenues from energy sales."
To read the full news release, click below:
Mercer International buys Fibrek Inc
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