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Bullboard - Stock Discussion Forum Interfor Corporation T.IFP

Alternate Symbol(s):  IFSPF

Interfor Corp produces and sells lumber, timber, and other wood products. The company operates sawmills to convert timber into lumber, logs, wood chips, and other wood products for sale. The firm also harvests timber for its sawmills on forest land owned by the Canadian government. Interfor pays the Canadian government stumpage fees based on the number of trees it harvests. The company's primary customers are in the construction and renovation industries. The majority of revenue is generated from the sale of lumber. The majority of Interfor's revenue comes from the United States.

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Interfor Corporation > $1.534 billion in cash on hands
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$1.534 billion in cash on hands

lifeisgood1010 (272) | August 09, 2022 01:53 pm

On June 6th, i noticed the unusual activity going on with RFP.

Now,what i don't understand is the decision making at Canfor.

At June 30th, they had $1.534 billion in cash,only $249 milion in LT debt and a book value of $34.44

They were buying under their NCIB like a clockwork in May and June.Since then zero buying.

OK, they announced $210 million for a new facilty in Alabama, but it will leave them with way to

much cash on the balance sheet.

Interfor would be a great fit geographically and would be highly accretive.

IFP actual EV is $1.88billion.Tackle a 30% premium and you get to $2.4Billion.
A 40% premium would cost CFP $2.7B

That is not even taking in consideration $520M lumber duty deposit of IFP and the $125 to $200m
coastal land value estimated to be sold over the next 18 months.

Let say that one day, we get a resolution on duty and IFP gets 80% back and let say we take the mid point for the coastal sale and apply a 25% tax rate,we them get a EV of $1.45B for Interfor.

That is less than what Canfor as cash on hands.Absolutly insane

What will be CFP next move?

Once again as a IFP long term shareholder, i may be seeing things that does not exist but it would 
really make sense to combine these 2 company together.

RE:$1.534 billion in cash on hands

Apaulson (148) | August 09, 2022 08:36 pm

If CFP was smart, they would move to acquire IFP but I don't think WFG is going to let that happen.

RE:RE:$1.534 billion in cash on hands

nelson07 (16) | August 10, 2022 08:26 am

You may be right Apaulson.

But i wonder if regulators would permit the number 1(WFG) acquire the number 4 (IFP)
north american lumber producer

Maybe with a few divestiture.

While i see absolutly no problem combining the number 3 (CFP) with Interfor.

If i was on Canfor board, i would recommend waitin after the IFP SIB(Sept. 2nd)
 and go after IFP.

Time will tell but Canfor will have to do something with this 1.5 billion in cash.

And Interfor can't stay forever at these half priced valuation bases on replacement cost of there
mills.

Last night,West Fraser annonced another permanent closure of mill capacity.these closure equat
to more than one new mills.

These guys are disciplined like never before.

This is good news for long term investors like me.


RE:RE:RE:$1.534 billion in cash on hands

Apaulson (148) | August 10, 2022 11:33 am

The only difficulty I think would be British Columbia.  

Their combined market share with an acquirer in Eastern Canada, Pacific Northwest (Canfor and WFG aren't even there) and the U.S. South would not be near the 50% which would be considered a monopoly.

IFG has been selling off their BC properites and transferred their harvest rights (tenure), I think in preparation of an acquisition.


RE:RE:$1.534 billion in cash on hands

lifeisgood1010 (272) | August 10, 2022 08:47 am

Wheras it's West Fraser or Canfor,i put a high probability of more merger-acquisition in this sector
before year end.

In any event, Interfor will eventually be better valued.The management got once again very good
comments from all analysts in the deployment of there excess capital.

Doing the SIB at below book value shows how disciplined these guys are.

They have a well balanced approch.They have the best growth over the past 3 years in the
industry while reducing the share counts by 23%

Until the SIB results are out Interfor SB will not go above $34.But after that, i expect a moveback in the $40 to $45

RE:RE:RE:$1.534 billion in cash on hands

Apaulson (148) | August 10, 2022 11:34 am

I think in the 4th quarter an offer for WFG and IFP may materialize.