Forest products merger
The steady drumbeat of consolidation in the resource sector continues, this time with the announced merger of two North American forest products and paper companies, Canada-based Abitibi-Consolidated and US-based Bowater Inc. The deal will make the new company, AbitibiBowater the third largest publicly traded forest products company in North America, with revenues of almost $8 billion.
Abitibi is the world's largest manufacturer of newsprint and paper used in magazines. It is also a major paper recycling company. In addition, it supplies lumber for construction. It also has extensive logging and sawmill operations, mostly in Canada. Its stock has declines in recent ears, partially because of the surge of the Canadian dollar.
Abitibi is the product of the series of mergers and acquisitions. In 1997, Abitibi-Price Inc. and Stone Consolidated. In 2000, Abitibi-Consolidated bought Canadian rival Donohue Inc. The company also has a joint venture with Norway's Norske Skog and Hansol Paper Co, creating the largest newsprint supplier in Asia, Pan Asia Paper Company.
Bowater is also a major manufacturer of newsprint, in fact, #2 in North America. Like Abitibi, it has extensive sawmill, pulp mills, and forestry operations in the US and Canada. In 1999, it snapped up Avenor, a Canadian forest-products company. In 2000, it bought US-based Newsprint South. In 2001, it acquired Canadian company Alliance Forest Products
Antirust issues have been raised due to the two companies' already predominant position in newsprint, bad news for the struggling newspaper industry. It is assumed that there will be lots of political pressure to stop the deal, or at least force the spin off of some pulp operations. But we've seen #1 and #2 companies merging with regulatory approval before now (think Maytag and Whirlpool).
5:31:41 PM 
|
|
