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Canfor shareholder to oppose offer to take company private

One of Canfor Corporation’s shareholders says it will oppose the pending acquisition of the remaining Canfor shares by Great Pacific Capital Corp.

Letko, Brosseau & Associates is an independent investment manager that manages about $27 billion for institutional and private clients. It holds approximately 4.7 per cent of the outstanding shares of Canfor.

In a release, the firm says the proposed offer is “very opportunistic and significantly undervalues” Canfor.

Great Pacific Capital has offered $16 per share for the approximately 49 per cent of Canfor it doesn’t already own. The Canfor board of directors has recommended shareholders accept the offer by the Jim Pattison–owned Great Pacific Capital.

Letko Brosseau says the 81.8 per cent premium to the closing price prior to the announcement of the proposed offer is based on a depressed share price ($8.80), a level that hasn’t been seen in almost 10 years. The firm maintains the offer is less than 50 per cent of what the shares were trading at in June 2018.

It also cited a Q3 2018 Canfor-authorized share repurchase at an average price of $27.91, which is 74 per cent above Great Pacific’s offer of $16 per share.

“We believe that Canfor earnings could improve materially with stronger housing starts, lumber capacity closures, improving pulp market and the contribution of Canfor’s latest acquisitions,” Letko Brosseau said in a statement.

The transaction must be approved by two-thirds of the shareholders. A vote is expected to take place in December 2019.