West Fraser Timber, that has until now specialised in lumber, intends to start manufacturing OSB too with its planned integration of Norbord. According to a statement released by West Fraser on 19 November, the firm intends to acquire all shares in Norbord in a share swap. Norbord shareholders are to receive 0.675 of a West Fraser share for each share that they own in Norbord. Based on the closing price of West Fraser common shares on 18 November, Norbord shares are valued at CAD49.35 or US$37.78 using this conversion ratio. This represents a 13.6% premium to the closing price of Norbord’s shares on 18 November and an 8.0% premium compared with the 10-day volume-weighted average trading prices of both companies.
The new company created by the merger will operate 24 wood-based panel sites in Canada, the US, the UK and Belgium (14 OSB, 3 plywood, 1 LVL, 3 MDF/HDF, 2 particleboard, 1 furniture parts), 33 sawmills in the US and Canada, along with five pulp and paper mills and six biomass power plants in North America. Like most of its wood-based panel sites, its North American sawmills are primarily located in the west of Canada and the south/south-east of the US; these regional overlaps should unlock synergies on wood procurement and distribution. Norbord’s four sites in Ontario, Quebec and Minnesota and its European activities build upon West Fraser’s current areas of activity. The new group will employ a total of around 10,000 workers.