West Fraser Timber Co. Ltd. announced today that it will buy Norbord Inc. in an all-stock deal valued at $4 billion.
The combined company, which will operate as West Fraser, will be the top global producer of both lumber and oriented strand board (OSB). However, company officials from both Norbord and West Fraser said the agreement is unlikely to affect the situation in 100 Mile House, where the Norbord plant was closed permanently earlier this month because it was deemed “uneconomic to operate.”
Although the mill is part of the transaction, it “does not change the underlying issues that led to that situation,” West Fraser spokeswoman Tara Knight said in an email.
Norbord shareholders will receive 0.675 of a West Fraser share for each Norbord share, which equates to C$49.35 (US$37.78) per Norbord common share, based on the closing price of West Fraser common shares on November 18.
Current West Fraser shareholders will own about 56 percent of the company, with current Norbord shareholders owning approximately 44 percent. Norbord’s principal shareholder, Brookfield Asset Management Inc., which owns about 43 percent of the Norbord common shares, supports the agreement.
“Norbord’s OSB production is a perfect complement to the West Fraser portfolio, enabling us to deliver a wider range of wood products, and making us a more complete, efficient and valuable partner for our customers,” Raymond Ferris, president and Chief Executive Officer of West Fraser, said in a news release.
“This transaction gives us additional financial flexibility to pursue strategic growth opportunities and better positions our company to deliver value to shareholders through the cycle.”
West Fraser will continue to be led by Ferris and Chris Virostek as Chief Financial Officer, while Peter Wijnbergen, president and CEO of Norbord will be appointed president, engineered wood, responsible for the company’s OSB, plywood, particleboard, MDF and veneer operations.
Sean McLaren, currently West Fraser’s Vice-President, U.S. Lumber, will be appointed president, solid Wood, responsible for all of the company’s lumber operations.Two of Norbord’s current independent directors will join the West Fraser Board, chaired by Hank Ketcham.
The deal is subject to shareholder and regulatory approvals.
