RE:RE:Something gonna give.... The majors are all there already. IFP looks good as the #3 Canadian name there by volume, but not at a signifant premium to a new greenfield. I can build a mill for $650/mfbm right -- so no rational outfit is going to write Ian a cheque for $1000/mfbm just to jumpstart the process by a few years.
The list below is old from 2018, so the CFF holdings are Resolute now. Tolko is headed there. It's really just JDI and Western that are odd men out. JDI is throwing capital at pulp and their east cost baseline, and Western does whatever they do (not grow and look after a cadre of dudes in suits).
This takeout can happen, sure. Ian says he has no offers but that's being coy. The issue is why sell for 20% or 30% more? That's dumb. I'd poison pill that (and they would). I would need a bigger premium than that to become part of Jimmy's empire. But who is going to pay 50% when it's value destructive given we know the going rate for used mills is $450 and new mills is $650? It would be different if they had panels as that's a major kicker.
Canfor will pick off small names and roll them in -- bite sized and cheap. They could issue equity for this name but why?? It would be a merger of equals at 60% premium but CFP has more than 2x the lumber overalls at 6.7 billion feet, more in the south, the 1.5 billion in Europe, and that million tons+ of pulp.
Sure the analysts have speculated this might be a thing but these are the dudes who still expect $590 as the average 2021 lumber price. A chimp with a dart board could do a better job. I mean sheeet man, we're 1/4 thru on calander date, but also forward sold six weeks. All at $1000+. Call it 35% in the bag. The math is that we have to hit $370 Lumber overnight and stay there if their sad and inflexible groupthink-driven take is to pan out. Many mills are underwater at that price, esp given the higher dollar, so it's doubly dumb to expect them to produce at a loss.
https://forisk.com/blog/2018/07/12/southern-lumber-producers-past-present-future/
Rational43 wrote: Interfor has what all the Canadian lumber companies want, a major presence in the US South.
Southern Yellow Pine logs have barely increased with a large supply, so sawmills like Interfor's turning cheap logs into high value lumber are making a fortune.
Log supply in BC will be lower for a long time due to pine beetle kill already being harvested, so the margins on BC sawmills will be lower (and higher cost labour)
Oh, and the US South mills of Interfor has zero tariff access to the US market.