Bowater Will Buy Canada’s Avenor

Bowater Inc., the United States’ largest newsprint maker, said today it will buy Canadian rival Avenor Inc. for $1.8 billion in cash and stock.

They said the combination would create the world’s second-largest newsprint producer after Abitibi-Consolidated Inc. of Toronto.

Abitibi had offered $1.4 billion for its Canadian rival two weeks ago, but Avenor called the offer “grossly inadequate.”

The bidder would also assume Avenor’s debt of more than $700 million.

Montreal-based Avenor is the world’s fourth-largest newsprint maker, and said the Bowater bid was the best alternative available.

Bowater said it would acquire all outstanding shares of Avenor for $24.67 per share in cash and stock. No more than 60 percent of the payment will be in cash.

The boards of both companies have approved the deal.