Weyerhaeuser Co., one of the nation’s largest forest product companies, said Wednesday it has agreed to combine its fine paper business with the Canadian paper maker Domtar Inc. in a deal it valued at about $3.3 billion.
I know I'm sounding a bit like a broken record, but it seems many of these buyouts/acquisitions are done more with Wall Street than Main street in mind.
All you have to do is read the press releases.
...Weyerhaeuser shareholders will get a 55 percent stake in the new company.
Weyerhaeuser said that stake was worth nearly $2 billion at Domtar’s closing price on Tuesday. Domtar stockholders will own a 45 percent stake in the new company.
Rogel said Weyerhaeuser chose to structure the deal in a way that also gives shareholders ownership in part because it is expected to be tax-free, while an all-cash deal would have been taxable.
“This particular transaction is by far the best that we could do to deliver value to our shareholders,” Rogel said.
“With this transaction, we are transforming Domtar into one of the world’s leading paper companies, creating a strong company for shareholders and presenting new opportunities for employees and customers,” Royer said.
Now we all know the reasons for something like this.
“The new Domtar is in a better position to compete than either company could on its own,” Steven R. Rogel, Weyerhaeuser’s chairman, president and CEO, said in a conference call with analysts.
And the all important savings.
The two executives said the deal is expected to generate about $200 million in annual “synergies” — cost savings and extra revenue — within the next two years, because the combined operation will be able to save money on things like transportation, logistics and purchasing.
But the line that always seems to worry me is this.
In an interview with The Associated Press, Royer said he did not expect any job cuts or mill closures as a result of the transaction. Rogel said he expected about 5,300 Weyerhaeuser employees will be moved over to the new company.
He "did not expect" cuts or closures. He "expected" employees to be moved. I feel the same way about that as I do when a sports franchise owner or GM gives an embattled coach their "vote of confidence".
Now, I'm not anti-corporation. Or anti-freedom. I just get this nagging feeling that publicly traded companies have begun to operate on the premise that what's best for their stockholders is best for consumers -and their employees.
I'm not so sure.
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