Newsprint - Canada - United States of America
By Erina Lin, Tuesday 30 January 2007 at 14:01 :: Printing & Production Systems :: #228 :: rss
by Tatiana Repkova
Canada's Abitibi-Consolidated Inc. and Bowater Inc. of South Carolina said they will combine in an all-stock deal their CEOs say should create a more powerful global competitor despite a declining U.S. newsprint market. The combined company will be known as AbitibiBowater Inc. and is expected have annual revenues of about $7.9 billion and a market capitalization of about $2.4 billion.
The combined company should be able to cut annual costs by about $250 million as a result of efficiency in areas such as production, selling, general and administrative costs, distribution and procurement, the companies stated.
"In order to strengthen both of our companies, this deal brings us both together and moves us to the next plateau," with a better mix of products and cutting costs, Abitibi Chief Executive John W. Weaver said. Bowater CEO David J. Paterson said in an interview he and Weaver have been working on the deal for about three months, and that he and Weaver got to know each other shortly after he took his job at Bowater in May. Both companies were looking at "options for growth," he said.
Weaver will become the executive chairman of AbitibiBowater and Paterson will serve as president and CEO. AbitibiBowater's product lines will include newsprint, uncoated and coated mechanical papers, market pulp and wood products. It will also be one of the world's leading consumers of recycled newspapers and magazines. The combined company will own or operate 32 pulp and paper facilities and 35 wood product facilities located mainly in eastern Canada and the southeastern United States. Company officials say it will be the third largest paper and forest products company in North America.
In 2005, Bowater had 8,000 employees. Abitibi had 13,500 workers. The combined AbitibiBowater will have about $6.2 billion in debt. Weaver and Paterson said the savings and continued forest land sales will help reduce that. http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003539010; January 30, 2007
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