JOHANNESBURG- Sappi Limited said on Thursday that its subsidiary, Sappi Canada Enterprises Inc, has signed an agreement to acquire the Matane high yield hardwood pulp mill in Quebec from Rayonier Advanced Materials Inc for U.S.$175 million.
The mill has a capacity of 270,000 tons per annum of high yield hardwood pulp.
Sapi said this transaction represents an opportunity to increase its pulp integration for both its North American and European packaging businesses.
The increased pulp integration is expected to lower Sappi's costs of pulp, reduce the volatility of earnings throughout the pulp cycle and
provide certainty of supply.
Earlier on Thursday, Sappi reported decreased third quarter earnings due to sluggish graphic paper demand in Europe and North America, which necessitated production downtime and weak dissolving wood pulp prices due to soft viscose staple fibre markets.
The transaction agreement for the acquisition of the Matane mill was concluded on Wednesday and is subject to certain customary conditions precedent, including the pre-requisite approvals of certain anti-trust authorities.
Sappi said the deal is expected to be concluded in the fourth calendar quarter of 2019. Sappi will fund the acquisition through internal cash resources and available debt facilities.