By Lisa Kerner
Charlotte, N.C., Jan. 29 - Abitibi Consolidated Inc. and Bowater Inc. have agreed to combine in an "all-stock merger of equals" expected to close in the third quarter of 2007, according to a company news release.
The newly formed company. AbitibiBowater Inc., will be based in Montreal, with regional manufacturing and sales offices in Greenville, S.C. Its stock will be listed on both the New York and Toronto stock exchanges.
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 transaction includes a $28 million termination fee.
Former Abitibi-Consolidated shareholders and will own 48% of the combined company, and former Bowater shareholders will own 52% of AbitibiBowater.
The merger is expected to create the third-largest publicly traded paper and forest products company in the United States with pro forma annual revenues of about $7.9 billion. AbitibiBowater's product lines will include newsprint, uncoated and coated mechanical papers, market pulp, and wood products.
Abitibi-Consolidated president and chief executive John W. Weaver will serve as executive chairman; while Bowater president and chief executive officer David J. Paterson will serve in the same capacities at the new company. The new company's board will consist of seven members each from Abitibi-Consolidated and Bowater.
"This is a logical strategic step to address the realities of today's marketplace," Paterson said in the release.
"Both Abitibi-Consolidated and Bowater shareholders will benefit from the upside potential of a financially stronger company that is able to generate significant cost synergies, improve its balance sheet, and compete more effectively."
Based in Montreal, Abitibi-Consolidated provides newsprint, commercial printing papers and wood products.
Bowater produces coated and specialty papers and newsprint in Greenville, S.C.
| Acquirer: | Abitibi-Consolidated Inc.
|
| Acquirer: | Bowater Inc.
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| Payment per share: | Abitibi shares exchanged for 0.06261 common shares of AbitibiBowater; Bowater shares exchanged for 0.52 common shares of AbitibiBowater
|
| Termination fee: | $28 million
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| Announcement date: | Jan. 29
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| Expected closing: | Third quarter of 2007
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| Stock price for acquirer: | NYSE: ABY; $2.64 on Jan. 26
|
| Stock price for acquirer: | NYSE: BOW; $22.15 on Jan. 26
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