Canadian Manufacturing

Canfor investor vows to vote against Pattison proposal to take company private

Letko, Brosseau & Associates Inc. said the offer by Great Pacific Capital Corp. is “opportunistic and significantly undervalues the company”

September 19, 2019  The Canadian Press

VANCOUVER – An investment management company that controls about 4.8% of the shares of Canfor Corp. says it will vote against the proposal by a Jim Pattison Group company to take the lumber company private.

Letko, Brosseau & Associates Inc. charges in a news release the offer by Great Pacific Capital Corp. is “opportunistic and significantly undervalues the company.”

The $16 per share bid to buy the 49% of Canfor that Great Pacific doesn’t already own represented an 81.8% premium to the prior closing price when made in August.

But the investment manager says that premium was based on a share price that had fallen to a level not seen since 2010 and the offer is about half what the shares were fetching a year ago.

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Letko, Brosseau, which manages about $26 billion in assets, says the offer values Canfor at about 4.2 times 2018 adjusted earnings, which is “unjustifiably low.”

Shares in Canfor rose more than 70% the day after the offer was made to close at $15.26 on the Toronto Stock Exchange. On Wednesday, they closed at $15.34.

“To protect the value of our investment, we intend to vote against the proposed going private transaction,” the release states.