Lumber giant Canfor has terminated an arrangement agreement between the company and Jim Pattison’s Great Pacific Capital Corporation.
The decision came despite a special committee of Canfor’s board previously supporting the almost $1-billion offer from Great Pacific Capital Corp to take full control of the publicly listed company and take it private.
Great Pacific Capital Corp already owns 51 per cent of Canfor, but to get the go-ahead for the $16-a-share cash offer, more than 50 per cent of the remaining shareholders had to back the offer. The deal would have cost $982 million.
In a prepared statement released on Monday night, Canfor said that the ‘majority of the minority’ of shareholders would not back the transaction by the Dec. 16, 2019 deadline. About 45 per cent of the minority voters were in favour, but that fell five pointd short.
A special meeting of Canfor shareholders set for Dec. 18 has been cancelled.
In October, the special committee gave shareholders five reasons why the offer should be accepted.
These were that the offer was for 80 per cent more per share than the day before the offer was made, that it was a cash offer, that the lumber industry was in difficulty, that an independent evaluation of the share price offer was reasonable and that there were limited alternatives, given Pattison already had 51 per cent of the company.
All of the directors, other than Barbara Hislop, and certain senior officers of Canfor had agreed to support the takeover bid.
However, recently there have been dissenters. Investment company Letko Brosseau & Associates, which holds 4.8 per cent of stock, said the offer undervalued the company.
Canfor is headquartered in Vancouver and has forestry operations in B.C., Alberta, the U.S. and Sweden. The company primarily deals in softwood lumber and also owns the majority of Canfor Pulp Products Inc, one of the world’s largest global producers of “market northern softwood kraft pulp.”