Billionaire Jim Pattison makes offer to take lumber maker Canfor private

Jim Pattison

Jim Pattison

The latter company has proposed to acquire all of Canfor's outstanding common shares, which it does not already own, for a price of $16 per share.

Great Pacific Capital's plans include delisting Canfor from the Toronto Stock Exchange, if the transaction is implemented. Shares bounced 70 per cent to $15 a share at the opening of trading Monday. The cash deal is estimated at $981.7 million. Canfor produces primarily softwood lumber and also owns a 54.8% interest in Canfor Pulp Products Inc., which is one of the largest global producers of market northern bleached softwood kraft pulp and a leading producer of high performance kraft paper. The company pointed out that taking Canfor private would eliminate significant administrative expenses and allow for reinvestment of these funds to stabilise the company's operations, especially in British Columbia.

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CIBC Capital Markets analyst Hamir Patel said in an analyst note that he estimates the share offer represents a much lower valuation on capacity than other forestry deals in recent years.

Canfor cautions its shareholders and potential investors that the Indicative Offer is non-binding on Great Pacific and there can be no certainty that the Indicative Offer or any other strategic transaction with Great Pacific or any other person will be pursued by Canfor, supported by Canfor's board of directors (the "Board") or ultimately completed. Ltd. paid for Gilman 2017 and the $525 U.S. per thousand board feet Canfor paid for Elliott Sawmilling previous year. Analysts were generally in favor of the deal, with Paul Quinn, an analyst at the Royal Bank of Canada, saying it brings a "vote of confidence" to the industry. Companies have responded by significantly cutting back capacity in the province, including numerous curtailments and several permanent mill closures.

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