VANCOUVER, B.C. -- Canadian forest products giant Canfor Corp. has received an unsolicited and non-binding proposal from Great Pacific Capital Corp. Great Pacific suggested that it would be willing to acquire all outstanding common shares of Canfor (excluding those already directly or indirectly owned by Great Pacific) at a price of $16 per common share - or around $981.6 million.

Great Pacific is owned by 90-year-old Canadian billionaire Jim Pattison - who already owns 51 percent of Canfor. The conglomerate owns businesses across many markets, including supermarkets, fisheries, billboards, and forest products.

Canfor shares climbed 72 percent after the offer was announced. The deal values the entire company at around $2 billion.

The board has constituted a special committee of independent directors (the “Special Committee”) to review the offer and, in consultation with its legal and financial advisors, consider Canfor’s strategic alternatives, including Canfor’s response, if any.

Canfor is an integrated forest products company based in Vancouver, British Columbia, with interests in British Columbia, Alberta, North and South Carolina, Alabama, Georgia, Mississippi and Arkansas, as well as in Sweden with its recent majority acquisition of Vida Group. Canfor produces primarily softwood lumber and also owns a 54.8 percent 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.

Canfor has been curtailing production as of late. Last month it shut down one British Columbia sawmill and permanently eliminated a shift at another. In combination with previous curtailments and the shutdown of its Vavenby sawmill, Canfor will lose 400 million board feet of lumber. Canfor sold cutting rights to its Vavenby mill to Interfor in June.

Canfor isn't the only Canadian mill struggling. British Columbia - Canada's largest lumber-producing province - exported just over 514 million board feet of lumber to the U.S. in October 2018, down from 645 million board feet from the same time 2017. Many Canadian lumber leaders have taken a hit - including West Fraser, Conifex, and Interfor - and restricted lumber production. West Fraser and Canfor have curtailed production more than once.
 
All cited challenging lumber markets, high log costs, log supply constraints, falling lumber prices, and U.S. import tariffs as factors.
 
Softwood lumber import tariffs of around 21 percent were levied onto Canada last year. The National Association of Home Builders (NAHB) told MarketWatch that those tariffs are restructuring the entire lumber global supply chain - incentivizing U.S. buyers to import from overseas rather than ship lumber across the Canadian border.
 

 

See canfor.com.

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