Forest Industry Forecasted to continue to Consolidate

In 2006, the forest industry witnessed nearly 300 mergers and acquisitions worth almost $26billion. Most notable was Domtar’s acquisition of Weyerhaeuser for $3.3billion – creating the largest uncoated paper producer in North America. Other large consolidations included Cascades 50% ownership of Norampac ($476million) and West Fraser’s purchase of timberlands from International Paper for $325million. The average deal size grew from $90million in 2003 to $169millin in 2006. Industry experts believe this will continue as the industry faces both increased pressure from imports and digital communication, as well as advanced energy, transportation, fiber, and chemical costs. Thus far in 2007, $9billion worth of deals have been reported.