West Fraser acquiring rival Norbord in $3 billion deal

11/20/2020

Canadian lumber and forest products giant West Fraser Timber Co. is acquiring rival Norbord Inc., one of the world’s largest oriented strand board (OSB) producers.

Under terms of the deal, West Fraser will acquire all of the outstanding common shares of Toronto-based Norbord in an all-stock transaction valued at approximately 4 billion Canadian dollars (US $3.1 billion).

Following the closing of the deal, the combined company will operate as West Fraser. 

Last month, Vancouver, British Columbia-based West Fraster reported that third quarter sales increased 32% C$1.69 billion (US$1.29 billion). 

This move gives West Fraser an even bigger punch when it comes to lumber, plywood and OSB production.

Norbord manufactures OSB through 17 facilities in the Canada, the United States and Europe. The company also produces medium density fiberboard (MDF), particleboard, and furniture.

“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,” said Raymond Ferris, president and CEO of West Fraser. “Norbord is the largest global OSB producer with a well-earned reputation for cost and margin performance, and for expanding the use of OSB in new applications and industries.”

According to Ferris, the Norbord business will also bring additional geographic diversity and expanded opportunities, including strong positions in the United Kingdom and Western Europe. 

“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,” Ferris said.

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 Nov. 18. This represents a 13.6% premium to the closing price of Norbord’s shares on the Toronto Stock Exchange on Nov. 18.,

“This transaction recognizes Norbord’s global OSB position and is a very exciting opportunity for our customers, our employees and our shareholders,” said Peter Wijnbergen, president and CEO of Norbord. “Joining West Fraser will allow us to expand our profile with our core new home construction customers, and provides a stronger platform to pursue our industrial OSB products strategy.”

Once the deal closes, West Fraser shareholders will own about 56% of the company, with current Norbord shareholders owning approximately 44%.

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