PaperlinX buys Canadian paper merchant for $97m

The acquisition will more than double the size of PaperlinX's paper merchanting operations in Canada, with the investment expected to meet its target of 15 per cent return on funds within the first three years. PaperlinX is hailing the opportunities for synergies made possible by the purchase, claiming it further leverages its global platform for paper merchanting.

Tom Park, managing director of PaperlinX, claims the Cascades buyout is part of the company's strategy of expanding its paper empire worldwide.

"It builds on our existing Canadian paper merchanting business made up of Coast Paper (acquired in April 2002) and Papier Turgeon (acquired in April 2003), providing the opportunity for significant operating synergies over time, beyond those included in our target return expectations," says Park.

Cascades Resources is a fine paper merchant that employs around 490 people in 15 locations across Canada, with annual sales revenues of $486 million and 210,000 tonnes of paper. The company is primarily a stockist merchant, providing a range of paper products that includes graphic arts supplies and industrial packaging.

In other PaperlinX news, long-serving CFO and director Darryl Abotomey has stepped down from the board of the financially troubled company. He is to be replaced by David Lamont, who is currently working at BHP Billiton as the CFO carbon steel materials group.

Lamont will be joining the company in February, but will not be taking up Abotomey's place on the board of directors. Abotomey's resignation will be effective from the beginning of 2006, with the board agreeing to provide him with an additional six months on top of his contractual entitlement of 12 months severance payment.