SUDBURY -- A Canadian company has reached a deal to buy U.S.-based Domtar, which operates mills in Espanola and Dryden.

According to a Bloomberg report, the all-cash sale will see Paper Excellence buy all Domtar holdings for US$2.8 billion.

"We have long admired Domtar’s expansive global footprint and believe that it will be a valuable addition to Paper Excellence,” Joe Ragan, global chief financial officer of Paper Excellence, said in the statement. “This marks a major step in our global strategy of identifying well-positioned assets and positioning them for growth.”

The deal comes when the paper industry is recovering from last year’s drop in demand, when the pandemic reduced the need for paper products at offices and schools, with many across the globe working from home. The price of pulp, a byproduct of wood and a key ingredient in paper-making, has since soared along with lumber as voracious home-building demand caught sawmills short of supply.

Domtar's Espanola Mill produces more than 200 different grades of technical and specialty papers, as well as bleached softwood kraft pulp, from the banks of the Spanish River.

Founded in the early 1900s by the Spanish River Pulp & Paper Company, Domtar acquired the mill in 1998. It's the largest employer in Espanola.

Domtar is North America’s largest manufacturers and marketers of uncoated paper and one of the world’s largest manufacturers of pulp. Paper Excellence, which makes pulp packaging and specialty paper and owns about a 49 per cent stake in a Brazilian mill, said it intends to continue Domtar’s operations as a standalone business, retaining its management team and corporate and production locations.

 The transaction has been unanimously approved by Domtar’s board, Bloomberg said.