A special committee of Canfor’s board has approved an almost $1-billion offer from a Jim Pattison company to take full control of the lumber giant.
Late Monday night, Canfor issued a news release stating an agreement had been struck in which Pattison’s company Great Pacific Capital Corp. “will acquire all of the Canfor shares it does not already own for cash consideration of $16 per Canfor share.”
Great Pacific Capital currently owns 51 per cent of Canfor, a public company. Once the transaction is completed subject to a shareholder vote, Canfor will become a private company under the Pattison conglomerate umbrella that includes supermarkets, fisheries and billboards.
The $16-a-share deal — which was offered in August — would cost Pattison $982 million.
The special committee has given 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.
“Great Pacific and its affiliates currently own approximately 51 per cent of the Canfor Shares and, as Great Pacific has indicated that it does not intend to sell any Canfor Shares, there are limited strategic alternatives available to Canfor,” the statement read.
“The special committee believes that the transaction represents fair value for shareholders and is the correct path forward for Canfor, Canfor employees, communities and shareholders. All of the directors, other than Barbara Hislop, and certain senior officers of Canfor have entered into agreements to support the transaction and vote their Canfor shares in favour of the transaction.”
The deal still requires the approval of two-thirds of the votes cast by the holders of Canfor shares, plus more than 50 per cent of the votes cast by non-Great Pacific shareholders. Last month the investment company Letko Brosseau & Associates, which owns 4.8 per cent of Canfor shares, told the media it was opposed to the offer because it claimed it undervalued the company.
A shareholder vote on the proposal is expected in December 2019.
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.”