Report: CVC, Kronospan in joint bid for West Fraser Timber
CANADA (From news reports) -- Private equity firm CVC Capital and wood panel manufacturer Kronospan have submitted a joint expression of interest to acquire Canadian lumber company West Fraser Timber Co, people familiar with the matter said on Tuesday, July 19.
Shares in West Fraser, which has a market capitalization of C$10.6 billion ($8.2 billion), rose 25% in pre-market trading on the news.
CVC and Kronospan have informed West Fraser's management they would like to proceed with deal negotiations, the sources said. The acquisition terms they proposed could not be learned.
There is no certainty that the parties would agree to any deal, the sources said, asking not to be identified because the matter was confidential.
CVC declined to comment, while West Fraser and Kronospan did not immediately respond to requests for comment.
The acquisition interest in West Fraser follows a two-year rally in its shares, as more people isolating and turning to home improvement during the COVID-19 pandemic led to a surge in demand for products such as lumber and plywood.
The housing market was boosted more broadly by people seeking more space as they worked from home.
But the company also faces headwinds. It said in its most recent earnings call in April that it had been struggling to fulfill orders because of transport and logistics problems in Western Canada that have persisted in the pandemic.
Privately held Kronospan, run by Austrian businessman Peter Kaindl, is a European maker of wood panels such as particle board and laminate flooring. CVC has 125 billion euros ($128 billion) in assets under management, according to its website.