U.S. private equity firm acquires Thunder Bay paper mill for US$218.6-million

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U.S. private equity fund manager Atlas Holdings purchased a Thunder Bay pulp and paper mill on Tuesday from Paper Excellence Group for US$218.6-million, the latest in a string of Canadian forest product acquisitions by an investor that specializes in running industrial businesses.

Greenwich, Conn.-based Atlas bought a mill that went on the auction block as part of a 2022 agreement between Paper Excellence, the country’s largest pulp producer, and the federal Competition Bureau.

To ensure continued competition in the eastern Canadian pulp market, the regulator required that Paper Excellence subsidiary Domtar Corp. stage a government-supervised sale of the Thunder Bay facility and a second pulp mill in Dryden, Ont. as a condition for approving Domtar’s $2.7-billion acquisition of Resolute Forest Products Inc. RFP-T, former owner of the Thunder Bay mill.

The Thunder Bay plant has approximately 460 employees, and opened in 1919. Atlas also struck a long-term contract with Paper Excellence to supply woodchips and biomass for the mill.

“We understand Thunder Bay’s importance as a pillar of the local economy, and we look forward to bringing our deep experience in pulp and paper as we convert the mill into a stable, independent enterprise,” said Atlas partner Neil Mahajan in a news release.

Atlas began investing in 2002, when its founder acquired a paper mill in Indiana with 85 employees. The fund manager currently owns stakes in 26 businesses with more than 50,000 employees, including six forest product companies, three of which have significant Canadian operations.

In 2013, Atlas bought Twin Rivers Paper Co. Inc., with pulp and lumber mills in New Brunswick and Maine, from Brookfield Asset Management Inc. In 2017, Atlas bought a controlling stake in Edmonton-based pulp producer Millar Western Forest Products Ltd., which was previously family controlled. Last year, Atlas acquired Crown Paper Group, which has four production and distribution sites in Alberta and B.C., along with operations in Washington state.

Atlas also operates in auto parts, packaging and aluminum-processing businesses, many of which have unionized work forces that are typically offered ownership stakes. The Thunder Bay mill acquisition is expected to close by the end of the year.

Jackson Widjaja, a third-generation member of Indonesia’s billionaire Widjaja family, owns Paper Excellence. The family also controls conglomerate Sinar Mas, which has extensive pulp and paper and palm oil operations in Asia.

Paper Excellence is based in Richmond, B.C., and became the country’s largest pulp and paper producer through a series of acquisitions over the past two decades. In 2007, the company launched its Canadian business by acquiring a single paper mill in Saskatchewan. In 2011, Atlas and another U.S. private equity firm sold a pulp mill and forest lands in Nova Scotia to Paper Excellence, after owning the assets for three years.

In 2019, Paper Excellence scaled up by purchasing B.C.’s Catalyst Paper Corp. and its three mills. Over the past two years, Paper Excellence snapped up Montreal-based Domtar for US$2.8-billion, then acquired Resolute a few months later.

Paper Excellence used BMO Capital Markets as its financial adviser on the sale of the Thunder Bay mill, while law firm Stikeman Elliott LLP served as legal adviser.