Interfor Corp T.IFP

$1.534 billion in cash on hands

[lifeisgood1010]

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.

[Apaulson]

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

[nelson07]

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

[Apaulson]

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

[lifeisgood1010]

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

[Apaulson]

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