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Summary
- West Fraser concluded its acquisition of Norbord and offered 0.675 of West Fraser’s common share in return for every outstanding share of Norbord.
- Stocks of West Fraser have yielded 58 per cent returns in one year, with a price-earnings ratio of 15.90.
- West Fraser and Norbord will announce their Q4 results on Thursday, February 11.
The Vancouver-based lumber company, West Fraser Timber Co. Ltd. (TSX:WFT), has acquired oriented strand board producer Norbord Inc. (TSX:OSB). The completion of this acquisition deal was announced on February 1. West Fraser purchased 100 per cent issued outstanding shares of Norbord for C$ 4 billion. The combined entity is now operating under the ‘West Fraser’ name with the symbol ‘WFT’.
Norbord’s stockholders got 0.675 of West Fraser’s common share in return for every outstanding share of Norbord.
On January 19, both companies held a special meeting with their stockholders to vote on the proposed acquisition. Almost 99 per cent of shareholders from both the forest products firms voted for the agreement resolution. Norbord and West Fraser's representatives will hold a joint call on Friday, a day after announcing their fourth quarter results.
Following the conclusion of the deal, West Fraser’s outstanding shares are trading on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX) while Norbord’s outstanding shares were delisted from both the exchanges.
Let us take a glance at both forest product stocks’ performances:
West Fraser Timber Co. Ltd. (TSX:WFT)
The timber stock’s current price is C$ 85.40, and it has a market cap of C$ 5.6 billion. The company pays a quarterly dividend of C$ 0.20 per share, yielding 0.949 per cent.
The stock jumped as much as 1.5 per cent on Wednesday, on the back of its acquisition of Norbord. It is up 58 per cent in one year and by 3 per cent year-to-date (YTD), with a price-to-earnings ratio of 15.90.
The lumber firm posted an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of C$ 605 million in the third quarter of 2020, compared to C$ 184 million in the second quarter of 2020.
Image Source: Kalkine Group @2020
Norbord Inc (TSX:OSB)
Norbord stocks last traded on the TSX on February 2, 2021. Its final closing stock price was C$ 56.97 per share, with a market cap of C$ 4.6 billion.
The strand board manufacture’s share was up 46 per cent in one year, with a price-to-earnings ratio of 15.10. The stock had yielded almost 4 per cent in 2021.
Norbord’s adjusted EBITDA was US$322 million in the third quarter of 2020, up from US$ 33 million in the third quarter of 2019.
