Weyerhaeuser Company today announced that it has reached a definitive agreement to combine its Fine Paper business and related assets with Domtar Inc. The transaction gives Weyerhaeuser shareholders 55 percent ownership in the new company and includes a $1.35 billion cash payment to Weyerhaeuser. The cash payment, plus the stock valued at the closing price of Domtar stock on Aug. 22, 2006, results in a transaction value of $3.3 billion before considering resulting synergies.

The combination is expected to be tax-free for Weyerhaeuser and its shareholders for U.S. federal income tax purposes. The transaction, which has been approved by the boards of directors of both companies, is expected to close in the first quarter of 2007.

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