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Companies to Divest Newsprint Mill in Arizona to Preserve Competition

Oct.25.2007

U.S. Dept. of Justice News Release

The U.S. Department of Justice announced Tuesday that it will require two of the nation's largest newsprint manufacturers – Abitibi-Consolidated Inc. and Bowater Inc.– to divest a newsprint mill in Arizona in order to proceed with their proposed $1.6 billion transaction. The Department said that the merger, as originally proposed, would have substantially lessened competition in the production and sale of newsprint in North America.

Under the proposed consent decree, Abitibi and Bowater agree to divest Abitibi's newsprint mill in Snowflake, Arizona. The Snowflake mill is one of the largest and most profitable newsprint mills in North America. In addition, the merged company will be required to notify the Department before acquiring an additional interest in any mill or machine that is currently jointly-owned by either Abitibi or Bowater with any third party, if the value of the acquisition exceeds $2 million.

Abitibi is a Canadian corporation based in Montreal, Quebec, Canada. Abitibi owns 12 paper mills worldwide that produce newsprint, including 11 in the United States and Canada. In 2006, Abitibi reported worldwide sales of approximately $4.8 billion, including about $1.7 billion in North American newsprint sales.

Bowater is a Delaware corporation based in Greenville, S.C. Bowater owns nine mills that produce newsprint, eight of which are in the United States and Canada. In 2006, Bowater reported total sales of approximately $3.5 billion, including approximately $1.1 billion in North American newsprint sales.

http://www.usdoj.gov/atr/public/press_releases/2007/227085.htm

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Michael G. Van Arsdall
Senior Counsel – Washington, D.C.
Phone: +1 202.624.2782
Email: mvanarsdall@crowell.com