Amidst lumber tariff impact, Canfor contemplates US acquisitions

While smaller companies struggle to pay the tariffs the Trump Administration imposed on the Canadian softwood lumber industry, Canfor Corporation, one of the largest forestry companies in the world, has spotted several potential acquisition opportunities in the United States (US).

“We’ve got an appetite for [mergers and acquisitions],” CEO of Canfor Done Kayne said in a conference call with The Financial Post. “Clearly now with the valuations and so forth, we’re closely watching the market…so we’re just evaluating all those opportunities that may come up on an individual basis.”

The US government hit Canfor, based in Vancouver, with a 20.26 per cent countervailing duty on softwood lumber, part of the mounting long-running dispute over what US lumber producers allege is unfair subsidies for their Canadian competitors across the border. However, the top five Canadian multinational corporations (MNCs) were exempted from paying the retroactive duties imposed on all shipments to the US since the 1st of February: namely Canfor, Resolute Forest Products, Inc., Tolko Industries Ltd, J.D. Irving Ltd, and West Fraser Timber Co. Ltd.

Kayne said the company is in a good position, indicating its improved balance sheets and forecasting organic growth opportunities that can grow up to CAD$300 million (US$218 million) by 2018. “We’re certainly in an area now that I’m glad we are with all the uncertainties that are going on everywhere,” Kayne continued.

Canfor is bracing itself for “marketplace volatility” as investigations into the duties and negotiations drag on. But at the same time, the company is looking forward to rising demand for softwood lumber in North America as the housing market in the US continues to slowly recover.

 

Source: The Financial Post