Domtar to Create Largest Fine Paper Company in North America through Combination with Weyerhaeuser's Fine Paper Business

• Enterprise value of new company to exceed US$6 billion

• The “new Domtar” to be led by Domtar’s current President and CEO, Raymond Royer

• Head Office in Montréal, Quebec; Headquarters of Operations in Fort Mill, South Carolina
  

MONTREAL, Canada, August 23, 2006 – Domtar Inc. (TSX/NYSE: DTC) today announced the creation of the largest manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world. Domtar has signed a definitive agreement to combine with Weyerhaeuser’s (NYSE: WY) fine paper business and related assets. The new company, to be called Domtar, will have its Head Office in Montréal, Quebec, while the Headquarters of Operations will be in Fort Mill, South Carolina. The transaction has been approved by the Boards of Directors of both companies.

“With this transaction, we are transforming Domtar into one of the world’s leading paper companies, presenting shareholders with new opportunities and creating a stronger company for employees and customers,” said Raymond Royer, Domtar’s President and Chief Executive Officer, who will lead the new company in the same capacity. “We are proactively enhancing the quality of our asset mix and taking decisive action to assure our future in a consolidating industry. In addition to more than doubling Domtar’s current paper production capacity, this compelling strategic and operational fit will make the new company financially stronger with prominent brands, a lower cost base and the necessary scale and scope to succeed in the highly competitive global marketplace”, added Mr. Royer.

Based on annualized Q2 2006 unaudited results for Domtar (excluding Norampac) and for Weyerhaeuser’s fine paper business, Domtar estimates the new company would generate approximately US$6.5 billion in sales and US$730 million in EBITDA, before synergies. The new company will have an enterprise value exceeding US$6 billion. Additional information about Domtar, this merger, and the products they manufacture is available at http://www.domtar.com.