MONTREAL, Feb. 4 - Domtar's Canadian Paper Merchants Group and Heidelberg Canada announced today that they have signed a definitive agreement to form a strategic alliance, creating a unique full service offering to the Graphic Arts Industry in Canada. The two companies provide printing solutions and paper supplies to printers, prepress, digital, postpress and other industry professionals. This strategic alliance, will enhance each respective company's current sales and service platform. Benefits will include improved delivery service, simplified order management and added incentives. Beginning March 1st, 2002, the companies will combine warehousing and distribution activities in all markets across Canada, with the exception of Toronto and Montreal where only product deliveries will be combined. The companies will continue to operate their specialized sales teams and financial functions independently. Our companies will mutually benefit from increased sales attributed to improved services and market coverage as well as improved logistics efficiencies and lower costs. "This alliance will allow us to be even more responsive to the needs of our customers", said C. Lance Skerratt, Senior Vice-President, Domtar's Paper Merchants Group. "The primary goal of the alliance between Heidelberg and Domtar's Canadian Merchants is to provide our customers with improved service through a streamlined ordering process and more frequent deliveries. Turn- around time in our industry is a critical issue and this is a positive step towards improvement" said Richard Armstrong, President, Heidelberg Canada. Domtar's Canadian Paper Merchants Group operates eight distribution centres in Eastern Canada under the Buntin Reid, The Paper House and JBR, La Maison du Papier trade names. Heidelberg Canada Graphic Equipment Limited is a wholly owned subsidiary of Heidelberg Druckmaschinen AG and operates eight distribution centres across Canada. Both companies have a long history of industry leadership and distribute the most prestigious product franchises available. Domtar is the second largest producer of uncoated freesheet paper in North America and the third largest in the world. It is also a leading manufacturer of business papers, printing and publishing papers, and specialty and technical papers. Domtar manages close to 36 million acres of forest land in Canada and the United States, and produces lumber and other wood products. Domtar has 12,500 employees across North America. The company also has a 50% investment interest in Norampac Inc., the largest Canadian producer of containerboard.