The Competition Bureau of Canada deemed the sale necessary after Paper Excellence bought Domtar last year
Kruger Inc. of Montreal will be the new owner of the pulp mill in Kamloops.
On May 11, 2021, Richmond-based Paper Excellence and Domtar, based in Montreal and Fort Mill, SC, reached an agreement for Paper Excellence to purchase Domtar for $55.50 per share, a deal worth about $3 billion in United States currency.
The Competition Bureau of Canada concluded the merger would likely lessen competition substantially for the purchase of wood fiber — a key input in the manufacture of pulp — from the Thompson/Okanagan region.
As a result, the bureau determined the proposed transaction was anti-competitive because it would enable Paper Excellence to pay lower than competitive prices to sawmills and other suppliers of wood fiber in a region where Paper Excellence already has a high concentration of pulp mills.
To resolve the bureau’s concerns, Paper Excellence agreed to sell Domtar’s Kamloops pulp mill following its acquisition.
That sale is now complete, with privately held Kruger now owing the mill on Mission Flats Road.
The pulp mill is one of the city’s largest employers, with about 350 employees, while the operation pays about $5 million per year to the city in property taxes. The mill opened on Nov. 30, 1965, under the Kamloops Pulp and Paper Company name. In 1971, Weyerhaeuser bought the mill and operated it under that banner until 2007, when Domtar purchased the operation.
The Kamloops mill produces high-quality northern bleached softwood kraft pulp and unbleached softwood kraft for customers in North America and Asia.
“We’re very excited about the opportunities that will arise from this acquisition, not only for Kruger, but also for the Kamloops mill, BC wood fiber suppliers and the local community,” Kruger executive vice-president François D’Amours said in a statement.
“There is a natural fit between Kruger and the Kamloops mill, which has an impressive track record in terms of performance, sustainability, health and safety and employee engagement.”
Founded in Canada in 1904, Kruger is a major provider of tissue products, 100 per cent recycled containerboard, corrugated packaging, publication papers, specialty papers, renewable energy, cellulosic biomaterials and wines and spirits.
Kruger Inc. has 5,500 employees and its facilities are located in BC, Québec, Ontario, Newfoundland and Labrador, Tennessee, Maine, New York, Virginia, Kentucky and Rhode Island.
With the Domtar purchase, Kruger will have nearly 700 employees in BC It also owns the Kruger Products tissue plant in New Westminster and Kruger Energy’s Zeballos Lake Hydro Plant on Vancouver Island.
The purchase agreement is expected to be finalized in the second quarter of 2022 and is subject to standard conditions, including the approval of the Commissioner of Competition.