Logs are piled up at West Fraser Timber in Quesnel, B.C., on April 21, 2009. West Fraser Timber Co. Ltd. has signed a deal to acquire Norbord Inc. in an all-stock transaction valued at $4.0 billion.THE CANADIAN PRESS/Jonathan Hayward

Logs are piled up at West Fraser Timber in Quesnel, B.C., on April 21, 2009. West Fraser Timber Co. Ltd. has signed a deal to acquire Norbord Inc. in an all-stock transaction valued at $4.0 billion.THE CANADIAN PRESS/Jonathan Hayward

West Fraser Timber to acquire Norbord in all-stock deal valued at $4B

Shareholders are being offered 0.675 of a West Fraser share for each Norbord share

A $4-billion all-stock deal to take over Norbord Inc. will transform West Fraser Timber Co. Ltd. into a “global diversified wood products company,” CEO Ray Ferris said Thursday.

Norbord, the world’s largest manufacturer of oriented strand board housing panels, will expand West Fraser’s product mix, give it access to new markets in Europe and Eastern Canada and allow cost savings of about $80 million per year through synergies within two years, he said.

“Norbord’s industry-leading OSB capacity of close to nine billion square feet, when combined with more than six billion board feet of West Fraser lumber and our mix of panels, engineered wood, pulp, and renewable energy, truly creates a strong platform of balanced high-quality capacity able to supply a wide variety of home building, construction and industrial needs,” said Ferris on a conference call.

Norbord CEO Peter Wijnbergen, who is to become president of engineered wood with the combined company, said the deal will create a “one-stop shop” for construction customers and offer greater access to capital for corporate growth.

Shareholders are being offered 0.675 of a West Fraser share for each Norbord share, a deal the companies said values the target company at $49.35 per share based on West Fraser’s closing price on Wednesday.

The offer equates to a 13.6 per cent premium over Toronto-based Norbord’s closing price on Wednesday and the stock was quick to slightly exceed that level on Thursday, jumping by as much as $6 to $49.46 before drifting down to $46.98 at noon ET.

Vancouver-based West Fraser’s shares, meanwhile, traded lower, dropping by as much as five per cent or $3.72 to $69.39 per share in Toronto.

Lumber and OSB prices surged to record highs in North America over the summer thanks to ongoing robust demand for building products from both new housing and home renovation markets, although they’ve trended lower recently due to a seasonal slowdown in activity.

A shortage of wood fibre in British Columbia due to wildfires and an infestation of the mountain pine beetle has meant forestry companies have been unable to greatly increase production to take advantage.

The deal requires approval of holders of two-thirds of Norbord shares and a simple majority vote by holders of West Fraser’s common and class B shares. Current Norbord investors would wind up with 44 per cent of the company.

Brookfield Asset Management Inc., Norbord’s principal shareholder with a 43 per cent stake, has agreed to support the agreement.

Hank Ketcham, whose family founded West Fraser and owns about 11 per cent of the shares, is to continue to serve as chairman.

The deal is expected to be put to shareholder votes in January and close in the first quarter of 2021.

The new West Fraser would have 10,000 employees, 33 lumber mills, five pulp and paper mills, 14 OSB plants, 10 plants producing other panel products, six renewable energy facilities and one furniture plant.

Its head office is to remain in Vancouver, with a regional office in Toronto.

The transaction is to be reviewed under Canada’s Competition Act but Ferris doesn’t think there’s any significant risk from that process.

Dan Healing, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Chief Joe Alphonse
OP-ED: Williams Lake municipal, regional councils lack awareness on historical trauma

Systemic racism isn’t always obvious to those that are not experiencing it

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. THE CANADIAN PRESS/Paul Chiasson
36 new cases of COVID-19, one death in Interior Health

The number of active cases in the region is at 366

The City of Williams Lake is asking for public feedback on whether it should explore the opportunity to host a Greater Metro Hockey League team in Williams Lake. (Angie Mindus photo - Williams Lake Tribune)
Williams Lake GMHL expansion questions, concerns, to be discussed later this month

If approved, the team would begin play in the fall of 2021

B.C. Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry head for the B.C. legislature press theatre to give a daily update on the COVID-19 pandemic, April 6, 2020. (B.C. government)
B.C. nears 300,000 COVID-19 vaccinations, essential workers next

564 new cases, four deaths, no new outbreaks Thursday

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Walter Gretzky father of hockey hall-of-famer Wayne Gretzky waves to fans as the Buffalo Sabres play against the Toronto Maple Leafs during third period NHL hockey action in Toronto on Tuesday, Jan. 17, 2017. THE CANADIAN PRESS/Nathan Denette
Walter Gretzky, father of the Great One, dies at 82

Canada’s hockey dad had battled Parkinson’s disease and other health issues

Kelowna General Hospital (File photo)
Second death reported in Kelowna General Hospital COVID-19 outbreak

A total of seven cases have been identified at the hospital: six patients and one staff

Municipal Affairs Minister Josie Osborne speaks in the B.C. legislature, March 4, 2021. (Hansard TV)
B.C. Liberals, NDP sing in harmony on local election reforms

Bill regulates paid canvassers, allows people in condo buildings

(National Emergency Management Agency)
No tsunami risk to B.C. from powerful New Zealand earthquake: officials

An 8.1 magnitude earthquake shook the north of New Zealand Thursday morning

(AP Photo/Richard Vogel, File)
Pandemic stress, isolation key factors as to why Canadians turned to cannabis, alcohol

Study found that isolation played key role in Canadians’ substance use

(File photo)
Kamloops Mountie bitten while arresting woman

The assault on March 1 is the latest in a string of incidents that have left local officers injured

Most Read