Why Resolute Forest Products Shares Are Rallying Today?

  • Through its wholly-owned subsidiary Domtar Corporation, the Paper Excellence Group has agreed to acquire Resolute Forest Products Inc RFP.
  • Fairfax Financial Holdings Limited, a significant stockholder of Resolute with a 40% stake, has supported the acquisition.
  • The transaction brings complementary capabilities in lumber and pulp to Paper Excellence.
  • Resolute will become a wholly-owned subsidiary of Domtar under the auspices of the Group and continue to operate on a business-as-usual basis under the Resolute name. 
  • The cash portion of the merger consideration represents a premium of approximately 64% to Resolute's last closing price, representing an enterprise value of approximately $2.7 billion.
  • Each Resolute share will receive $20.50 per share, together with a CVR entitling the holder to a share of future softwood lumber duty deposit refunds. Each share will be entitled to receive one CVR.
  • Under the CVR, stockholders will receive refunds on approximately $500 million deposits on estimated softwood lumber duties paid by Resolute. 
  • Price Action: RFP shares are up 67% at $20.86 during the premarket session on the last check Wednesday.
  • Photo by Capri23auto from Pixabay
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