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Highlights
- Canfor Corp will offer Canfor Pulp shareholders either CAD 0.50 per share or 0.0425 Canfor Corp shares as consideration.
- The offer represents a 25% premium to Canfor Pulp’s closing price on 2 December 2025 and a 38% premium to its 10-day VWAP.
- A go-shop period allows Canfor Pulp to solicit alternative acquisition proposals until 19 January 2026.
Canfor Corporation (TSX:CFP) and Canfor Pulp Products Inc. (TSX:CFX) announced that they have entered into an arrangement agreement under which Canfor Corp will acquire all remaining common shares of Canfor Pulp that it does not already own. The proposal will be carried out through a court-approved plan of arrangement under the Business Corporations Act (British Columbia).
Acquisition Proposal Offers Cash or Share Consideration
Under the arrangement agreement, Canfor Corp plans to acquire all issued and outstanding Canfor Pulp shares not already owned by the company and its affiliates. Shareholders of Canfor Pulp will be able to choose between receiving CAD 0.50 in cash per share or 0.0425 of a Canfor Corp share. Canfor Corp currently owns approximately 54.8% of Canfor Pulp’s shares.
The proposed cash amount represents a 25% premium to Canfor Pulp’s closing share price on 2 December 2025 and a 38% premium based on the 10-day volume-weighted average price as of the same date.
Key Considerations for Canfor Pulp Shareholders
The board of Canfor Pulp considered several factors in evaluating the transaction. The cash alternative provides immediate value, while the share consideration offers an opportunity for shareholders to participate in the combined company.
An independent valuation by Stifel Nicolaus Canada Inc. established a fair market value range of CAD 0.08 to CAD 0.52 per share as of 3 December 2025. The evaluation also included a review of Canfor Pulp’s liquidity needs, business outlook and risks affecting the broader pulp industry.
The arrangement agreement contains a go-shop period until 19 January 2026. During this time, Canfor Pulp may solicit and negotiate with third parties interested in acquiring the company. Canfor Corp will not have a matching right if a superior proposal emerges. A termination fee of CAD 500,000 would apply if such a proposal is accepted.
Benefits Considered by Canfor Corp
Canfor Corp’s board evaluated the proposal with financial and legal advisers. The transaction is expected to streamline the ownership structure between the two companies and may offer cost efficiencies following completion.
Canfor Corp also considered alternatives to address risks associated with its investment in Canfor Pulp, including potential operating and market-related challenges. The go-shop mechanism was identified as a feature that provides flexibility for Canfor Pulp and supports a competitive process.
Advisers Supporting the Transaction
Stifel is serving as independent financial adviser and valuator to the Canfor Pulp Special Committee, with Osler, Hoskin & Harcourt LLP acting as legal counsel. BMO Capital Markets and Lawson Lundell LLP are acting as financial and legal advisers, respectively, to Canfor Corp.
