Canfor Corp., Vancouver, BC, said in November it had agreed to acquire all the shares of Slocan Forest Products Ltd. (Slocan), Richmond, BC, in a share exchange based on 1.3147 Canfor shares for each Slocan share, representing a 41% premium.
The transaction, including assumption of Slocan’s $C145-million net debt, is worth about $C630 million. The new company will be the world’s largest spruce/pine/fir lumber manufacturer and have the second largest lumber capacity in North America behind Weyerhaeuser.

Canfor tried to buy Slocan in 1995 but was rebuffed. David Emerson, Canfor’s president and CEO, will step down and Slocan’s president and CEO, Jim Shepherd, will replace him. Total capacity will be over 5.2 billion board feet of lumber, 1.2 million tonnes of pulp, 950 million square feet of plywood and OSB, and 150,000 tonnes of kraft paper.

Savings are expected to be about $C60 million through marketing programs and operating efficiencies, market capitalization will exceed $C1 billion, annual sales will be over $C3 billion and assets over $C3 billion. Canfor will stay headquartered in Vancouver.

Great Pacific Industries Inc., owned by Jim Pattison, which owns 20.7% of Slocan shares, and Ike Barber, the founder of Slocan, both support the move. Pattison also beneficially owns 19.1% of Canfor. Completion will require approval by three-quarters of the votes cast by Slocan’s shareholders. The arrangement must also be approved by a simple majority of the votes cast by Slocan’s shareholders, excluding the shares beneficially owned by Pattison.

Federal and provincial approvals are still required. Canfor will earn about $C9 million as a break-up fee should Slocan change its mind in favor of a competing bid.

The new board will comprise 15 directors, 11 from Canfor and four nominees from Slocan. Peter Bentley of Canfor’s founding family will be board chairman. The transaction is expected to close late in the first quarter of 2004.

Canfor has woodlands operations and manufacturing facilities in BC, Alberta and Quebec, and a lumber remanufacturing plant in Washington State. It produces lumber (it is already Canada’s largest softwood lumber producer), bleached kraft pulp, specialty kraft paper and plywood for markets around the world. The operating company is Canadian Forest Products Ltd.

Slocan owns and operates 10 sawmills, a plywood plant, an OSB plant and a lumber remanufacturing and laminated beam facility. It has a BCTMP mill, called Fibreco Pulp Inc., in Taylor, BC. There is a joint venture with Louisiana-Pacific Corporation to construct a new OSB plant in the Fort St. John area of British Columbia. www.canfor.com; www.slocan.com. PI
 

Back to Current Issue