As previously disclosed, On May 10, 2021, Domtar Corporation, a Delaware corporation (the “Company”) entered into an agreement and plan of merger (the “Merger Agreement”) with Karta Halten B.V., a private limited company organized under the laws of the Netherlands (“Parent”), Paper Excellence B.V., a private limited company organized under the laws of the Netherlands, Hervey Investments B.V., a private limited company organized under the laws of the Netherlands, and Pearl Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, among other things, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent.
On June 29, 2021, the Company filed a definitive proxy statement in connection with the special meeting of the stockholders of the Company to consider and vote on a proposal to adopt the Merger Agreement.
On June 17, 2021 and June 30, 2021, the Company received demand letters (the “Demand Letters”) from stockholders for supplemental disclosures regarding the Merger.
The definitive proxy statement is modified and supplemented by, and should be read as part of, and in conjunction with, the disclosures set forth in this current report on Form 8-K. To the extent that information in this current report on Form 8-K differs from or updates information contained in the definitve proxy statement, the information in this current report on Form 8-K shall supplement or modify the information in the definitve proxy statement.
Supplemental Disclosures
The Company is making the following supplemental disclosures to the definitive proxy statement in connection with its response to the Demand Letters. The Company believes that no further disclosure is required to supplement the definitive proxy statement under applicable law. Nothing in this supplemental disclosure shall be deemed an admission of the legal necessity or materiality of any of the disclosures set forth herein. Capitalized terms used herein but not otherwise defined herein have the meanings ascribed to those terms in the definitive proxy statement. All page references are to the definitive proxy statement and terms used below, unless otherwise defined, shall have the meanings ascribed to such terms in the definitive proxy statement. For the avoidance of doubt, no deletion of any text or information omitted from this supplemental disclosure is intended.
The disclosure in the section entitled “Background of the Merger”, beginning on page 38 of the definitive proxy statement, is hereby modified by deleting the struck through text and inserting the new text underlined in the below portions of such section.
From time to time over the course of the next two years, Barclays remained in contact with Mr. Williams and indicated that it believed PE was still interested in a potential transaction, but no further discussions occurred between the Company and PE during this period. The Board was kept apprised of all material discussions with Barclays during this period.
On January 8, 2021, the Company announced an agreement to sell its personal care business to AIP pPartners for $920 million in cash (the “AIP Transaction”). The Company announced that it would use the proceeds to reduce debt by $600 million and to repurchase $300 million in Company common stock. The transaction closed on March 1, 2021. The AIP Transaction was executed prior to PE’s renewed expression of interest in a transaction, and there was no nexus between the AIP Transaction and a potential transaction with PE.
On March 31, 2021, the parties executed a new bilateral non-disclosure agreement, which contained customary standstill and non-solicitation provisions, and a “clean team” addendum with respect to competitively sensitive information. The standstill provision would expire in the event (i) of the entry by the Company or one of its affiliates into a binding definitive agreement with any third party to effect an Alternative Transaction, (ii) of the public announcement by the Company that it is engaged in a process to review to its strategic alternatives (including with respect to potential Alternative Transactions) or (iii) that a tender or exchange offer, which if consummated would constitute an Alternative Transaction, is made for securities of the Company and the board of directors of the Company fails to recommend that its stockholders reject such offer within ten business days from the date of commencement of such offer. The term “Alternative Transaction”, with respect to the Company, is defined in the non-disclosure agreement to mean any proposal or offer (other than a proposal or offer by PE or its affiliates) made by any person relating to, in a single transaction or series of related transactions, any direct or indirect (a) acquisition of more than 50% of the assets of the Company and its subsidiaries, taken as a whole, or assets comprising 50% or more of the consolidated revenues or EBITDA of the Company and its subsidiaries, taken as a whole, including in any such case through the acquisition of one or more subsidiaries of the other party or (b) acquisition in any manner by any person or group of more than 50% of the Company’s equity securities.
