Tissue paper producer Cascades Inc. says it will take full control of Quebec-based Papersource Converting Mill Corp. for $85-million, including debt.
The Kingsey Falls, Que.-based company said Tuesday it is paying $60-million in cash for the 50 per cent of Papersource it does not already own.
The transaction values Papersource at $145-million.
Cascades Tissue Group president Suzanne Blanchet said the acquisition will strengthen the company's position as a seller of bathroom tissue, paper towels and facial tissue to non-residential markets - ranging from schools and offices to hospitals and other users in Canada and the United States.
The transaction is expected to be signed in mid-September, subject to approval by the Competition Bureau.
Papersource, located in Granby, Que., has more than $130-million of annual sales and consumes 90,000 tons of paper.
"This announcement confirms the firm intention of Cascades to be a key player in the tissue paper sector in North America," president and chief executive officer Alain Lemaire in a release.
Papersource is a tissue paper converting plant that manufactures products for the away-from-home market. It employs more than 160 employees.
Pierre Lacroix of Desjardins Capital Markets said the acquisition is positive despite the additional debt because of the quality and profitability of Papersource and Cascades' familiarity with the assets.
"Moreover, this investment is in a sector (tissue) that has frequently demonstrated its resilience to economic cycles and the ability to generate an attractive return on capital," he wrote in a report.
Founded in 1964, Cascades produces, converts and markets packaging and tissue products that are composed mainly of recycled fibres.
The company employs close to 11,000 employees in North America and Europe.
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