|Bid||71.77 x 0|
|Ask||72.13 x 0|
|Day's Range||69.90 - 72.43|
|52 Week Range||21.60 - 76.14|
|Beta (5Y Monthly)||2.44|
|PE Ratio (TTM)||13.42|
|Forward Dividend & Yield||0.80 (1.11%)|
|Ex-Dividend Date||Sep 29, 2020|
|1y Target Est||N/A|
(Bloomberg) -- Strong homebuilding activity in North America will mean tight wood supply and demand for several more years, according to the top executive of the world’s largest lumber producer.“In the next five years, we see housing starts continuing to be strong and an industry that will be working hard to keep up with demand,” West Fraser Timber Co. Ltd. Chief Executive Officer Ray Ferris said Wednesday in a phone interview.West Fraser sells about 30% to 40% of its products into the housing industry, according to Ferris, which means his outlook bodes well for the Vancouver-based firm. Demand and prices for lumber and other wood materials soared during the pandemic on a surge in renovations and home construction, benefiting producers. West Fraser deepened its commitment to the industry last week with a $4-billion ($3.1 billion) offer to acquire Norbord Inc., the world’s largest producer of a plywood stand-in known as oriented strand board.AcquisitionsWest Fraser has expanded through acquisitions during the past 65 years and Ferris said the Norbord deal will further diversify the company, providing more of a hedge on trade, currency, product line and geography. Norbord has 17 operations in the U.S., Europe and Canada, according to its website. West Fraser has 45 facilities in the western Canadian provinces of British Columbia, Alberta and the southern U.S., its website said.West Fraser manufactured 5.9 billion board feet of lumber in U.S. and Canadian mills last year, according to the company. Roughly 60% of its lumber sales are in the U.S., with 20% in Canada, 16% in China and the rest in Japan and other markets.“We believe we’re going to be able to build at a higher level and build a capacity to take on future growth,” Ferris said, adding that though no other takeovers are looming “every day we’re looking for things that make the company stronger and better.”One adjustment already has been to shift production to Alberta and the U.S. after mountain pine beetle infestations damaged forests in West Fraser’s home province. About three-quarters of the company’s production now takes place in Alberta and the U.S. South, according to Ferris.“Our focus has shifted heavily to the U.S. South,” Ferris said. “We see continued ability to modernize and grow for several years to come.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Moody's Investors Service, ("Moody's") says that West Fraser Timber Co. Ltd. (West Fraser, Baa3 negative) announcement yesterday that it has signed an agreement to acquire Norbord Inc. (Norbord, Ba1 stable), the world's largest oriented strand board (OSB) producer, in a stock-for-stock transaction valued at approximately $3.1 billion is credit positive. The deal is credit positive because Norbord's panel business will significantly improve West Fraser's scale, geographic and operational diversity and broaden its product offering. Additionally, Norbord's low cost facilities and expected synergies will improve West Fraser's consolidated EBITDA margins, while lessening West Fraser's relative exposure to British Columbia's high cost and uncertain fiber basket.
(Bloomberg) -- A Canadian lumber giant agreed to spend about C$4 billion ($3.1 billion) to buy the world’s biggest maker of a plywood substitute, tapping into the high demand for wood products during a pandemic-fueled surge in homebuilding.West Fraser Timber Co. Ltd. has long sought to expand into oriented strand board, an inexpensive plywood substitute that’s mostly used in residential construction. The Vancouver-based company’s focus on the housing industry -- which drives wood consumption -- made its Thursday offer to buy Norbord Inc., the world’s largest maker of the engineered-wood product, a good fit.“West Fraser’s been interested in growing OSB as long as I’ve been around. We’ve never had the right opportunity and the right time to do that,” Chief Executive Officer Raymond Ferris said Thursday in a conference call. “It fits very well. We think the growth runway and opportunity is out in front of us and we’re fortunate to have been able to take advantage of it.”A wave in homebuilding and renovations during the pandemic has fueled surging prices for lumber, plywood and other engineered-wood products, bringing windfalls to North American producers. Lumber futures soared to a record in August and oriented strand board followed weeks later to surpass plywood prices, increasing the appeal for Norbord.Shareholders of Toronto-based Norbord will receive 0.675 of a West Fraser share for each share they own, which equates to C$49.35 based on West Fraser’s closing price on Wednesday, the timber companies said Thursday in a statement. That represents a 14% premium for Norbord investors, who would end up owning about 44% of the combined company, according to the statement.Expansion OpportunityNorbord soared 8.2% to C$47.02 as of 12:36 p.m. in Toronto, bringing its gain this year to 35%, while West Fraser fell 4.7% to C$69.66.The transaction is North America’s fourth-largest deal involving a timber company, and the largest since Weyerhaeuser Co.’s $6 billion sale of its containerboard, packaging and recycling business to International Paper Co. in 2008, according to data compiled by Bloomberg.The combination “makes a lot of sense,” CIBC analyst Hamir Patel said in a note to clients. “It provides West Fraser an opportunity to expand into another attractive category in wood products (OSB) by acquiring the leading producer with a very similar culture.”The deal comes as Canadian billionaire Jim Pattison has been seeking opportunities to invest through the pandemic. Pattison is a major West Fraser shareholder and individually owns 13.4% of the company. Norbord is 43% owned by Brookfield Asset Management Inc., which supports the deal. The transaction requires the approval of two-thirds of Norbord shareholders as well as support from the majority of West Fraser holders at meetings in January.NYSE ListingThe deal is also subject to West Fraser listing its common shares on the New York Stock Exchange, according to the statement. The transaction is expected to close in the first quarter.The combination will diversify West Fraser’s products and regions, which will help the company be stronger during down cycles in the lumber industry, Norbord CEO Peter Wijnbergen said on the call. He added there is good opportunity in Europe, where there is strong demand for wood in home construction.Wijnbergen will become West Fraser’s president of engineered wood and be responsible for manufactured wood products including OSB.The acquisition, which is expected to yield up to C$80 million in annual cost savings within two years, combines Norbord’s OSB capacity of nearly 9 billion square feet with West Fraser’s 6 billion board feet of lumber, the companies said in the call. CIBC’s Patel said the combined business should see reduced earnings volatility given the differing cycles between timber and OSB, and increased trading liquidity from a U.S. listing.Toronto-Dominion Bank advised West Fraser on the transaction and Bank of Nova Scotia was the independent adviser to the company’s board.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.