Domtar has confirmed that leadership is in talks with Canadian rival Paper Excellence for a potential merger of the two companies, in a prepared statement.

“Domtar acknowledges that its management has been in discussions with Paper Excellence about such a potential transaction. However, these discussions may or may not result in an agreement,” states Domtar, noting they will not further comment on the situation, which was first reported on Monday.

Paper Excellence, a privately held company, is based out of British Columbia with about $2.4 billion in annual sales from their seven manufacturing facilities in Canada. They employ about 2,800 people.

Domtar is based out of Montreal and South Carolina, with about 6,600 employees in 50 countries. They report their annual sales at about $3.7 billion. They own 13 pulp and paper mills with 10 manufacturing facilities.

Through the first quarter of 2021, Domtar reported a net loss of $29 million with $944 million in sales. That’s an improvement over the $59 million loss in the fourth quarter of 2020, but a significant drop from the net earnings of $5 million reported in the first quarter of last year, prior to the pandemic.

Dryden’s Domtar mill was recently named as one of Pulp & Paper Canada’s Safest Mills in 2020. With between 50,000 and 80,000 workers last year, Dryden’s Domtar reported 2 incidents after 719,633 hours worked.