The Matane mill sells high-yield pulp product for use in manufacturing paperboard, packaging, printing, and writing paper
Image: The Matane pulp mill in Quebec, Canada. Photo: courtesy of Sappi Limited.
South African paper and pulp maker Sappi has closed the acquisition of Rayonier Advanced Materials’ Matane pulp mill in Quebec, Canada for $175m.
Capable of producing approximately 270,000 metric tons of high-yield pulp, the Matane mill sells the products for use in manufacturing paperboard, packaging, printing, and writing paper.
The deal to acquire Rayonier Advanced Materials’ Matane pulp mill was signed in August 2019.
Commenting on the transaction, Sappi chief executive officer Steve Binnie said: “This acquisition will provide Sappi with both cost reductions and decreased volatility at a very competitive price per ton of pulp.
“The transaction strengthens Sappi’s pulp integration, improves our profitability and is another significant milestone towards realizing our Vision2020 goal.”
Acquisition to allow Sappi to increase pulp integration for packaging businesses
Sappi said that the acquisition will increase its pulp integration for its packaging businesses in both North America and Europe as well as supports its 2020Vision to grow in higher margin growth segments.
In addition to reducing Sappi’s cost of pulp and the volatility of earnings through the pulp cycle, the acquisition will allow Sappi to increase supply at its mills in North America and Europe to meet the increasing demand and as the capacity expands in certain growth businesses.
Rayonier Advanced Materials plans to use $100m of the proceeds from the sale of the mill to repay a portion of its senior secured credit facilities while the remaining funds will be used for general corporate purposes, including funding operations and repaying debt.
The Matane mill was purchased by the Rayonier Advanced Materials in 2017, as part of the acquisition of Canadian paper company Tembec for $807m.
Commenting on the sale of the mill, Rayonier Advanced Materials chairman, president and CEO Paul Boynton earlier said: “As part of our portfolio evaluation, the sale of the Matane mill allows us to divest a non-core asset while providing our stockholders with fair value.”