Pattison pulls Canfor bid as shareholders balk
Canfor Corp.’s minority shareholders scored a major victory against the management by rejecting a takeover plan proposed by its largest shareholder that they said undervalued the company.
The Vancouver-based Canfor abandoned on Tuesday a plan endorsed by management to sell the company for $16 per share — an 81 per cent premium on the forestry company ’s trading price this summer, but less than half the price from June 2018.
The company said that 45 per cent of its voting-eligible shareholders supported the deal, less than the 50 per cent required, and so it cancelled a meeting on Thursday to discuss the vote.
In August, Jim Pattison’s Great Pacific Capital Corp. bid to take the company private, having acquired 51 per cent of the shares at that time.
The 91-year-old billionaire made his move amid a suite of factors that hammered the forestry industry in British Columbia including massive layoffs, shift reductions and closures at sawmills around the province, as well as poor lumber prices connected to trade tensions and a slow U.S. housing market.
The company’s stock, which had been trading around $15.52 on Monday dropped almost 18 per cent after the announcement, closing at $12.77 on Tuesday — still significantly higher than the asking price of $8.80 on the day of Pattison’s bid. Analysts said the drop was expected and several signs pointed to a likely recovery.
“For current Canfor shareholders, we expect some near-term pain in order to preserve the longer-term upside,” Paul Quinn, an analyst with RBC Securities, wrote.