Canfor Corporation (TSX: CFP) is taking advantage of the current pulp situation within BC’s forestry industry, announcing this morning that it has entered into an arrangement to acquire the remainder of Canfor Pulp Productions (TSX: CFX) that it does not already own.
In making the announcement, Canfor says the rationale behind the combination is the opportunity for a stronger combined business by streamlining the ownership structure of Canfor’s investment in Canfor Pulp. The decision was also made as part of a strategic review on how to mitigate risks related to their prior investments in the pulp operation.
For Canfor Pulp shareholders, the combination is said to remove uncertainty related to the future of the company, given current and forecasted liquidity needs, mixed with current debt levels. The arrangement however does include a go-shop period through to January 19, 2026, enabling Canfor Pulp to actively solicit, evaluate, and enter negotiations with any third party that may be interested in acquiring the operation. A termination fee of just $500,000 is in play as a result.
Under the terms of the arrangement, Canfor Pulp shareholders are set to receive 0.0425 of a share of Canfor Corp or $0.50 in cash, for each share of Canfor Pulp held. The price tag amounts to a 25% premium to Canfor Pulp’s close on Tuesday, and a 38% premium based on the 10-day volume weighted average price of the equity.
An independent valuation conducted by Stifel Nicolaus Capital meanwhile determined that fair market value for Canfor Pulp lies somewhere in the $0.08 to $0.52 per share range.
The transaction remains subject to shareholder approval by Canfor Pulp shareholders, alongside customary regulatory and court approvals. The transaction is currently slated to close in the first quarter of 2026.
Canfor Corp currently holds a 54.8% interest in Canfor Pulp.
Canfor Pulp operates two mills in Prince George, British Columbia, with total capacity of 780,000 tonnes of annual production of pulp. That figure however is includes of 300,000 tonnes of capacity that has been curtailed indefinitely since August 2024.
Canfor Corp last traded at $11.68 on the TSX.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
