Jim Pattison’s bid to control Canfor draws mixed feelings in B.C.’s struggling forest towns

A B.C. billionaire’s bid to take full control of the province’s largest forestry company is likely good for his bottom line, analysts say, but whether struggling mill towns should be heartened by the news is a matter of debate.

Jim Pattison’s Great Pacific Capital Corp. wants to purchase the 49 per cent of Canfor it doesn’t already own with the intention of taking the company private, a move that led to a bounce in the Vancouver-based company’s stock prices Monday.

Forests Minister Doug Donaldson spun the news as positive in a summer marked by hundreds of lay-offs at mills around the province.

“Jimmy Pattison’s well-known as an astute businessperson, so I take it as a good sign,” he said in an interview with CBC Daybreak North guest host Wil Fundal.

“He knows the value in the company and therefore the value in the forest sector in B.C.”

But Pat Bell, who served as forests minister for the B.C. Liberals, isn’t quite so optimistic.

“Canfor is largely an international company, and it’s B.C.-based assets are now a relatively small portion of its total asset base,” he said.

“So [Pattison]’s really investing in the forests sector internationally, in the U.S., in Sweden, in pulp in all the different companies.”

‘Trees belong to the people of the province’

In Mackenzie, where 200 people are out of work as a result of an “indefinite curtailment” at a Canfor sawmill, Mayor Joan Atkinson reacted to news of Pattison’s bid with caution, pointing out the Jim Pattison Group also owns about 12 per cent of West Fraser, another major B.C. forestry company.

“For one individual to have that much control … I’m not sure how that’s going to play out,” she said. “Trees belong to the people of the province.”

Workers in Chetwynd, B.C., have been affected by curtailments at both West Fraser Forest Industries and Canfor. The Jim Pattison Group is the largest shareholder in both companies. (Andrew Kurjata/CBC)

Mayor Mitch Campsall of 100 Mile House said he would take a “wait and see” approach, noting West Fraser has been a good corporate citizen even as it curtails operations in his city.

“It’s always a big worry when big companies like that start taking over,” he said.

“But I’d rather have Canadian-owned than American-owned, so that is a good thing.”

Long-term international investment

Canfor is one of the biggest forestry companies in North America, with assets throughout British Columbia and the southern United States.

More recently, the company acquired majority control of Sweden’s VIDA Group.

Analyst Kevin Mason of ERA Forest Research said Pattison’s business acumen will help him see opportunities other investors don’t.

He said while others are nervous about uncertainty in the forest industry, Pattison can take advantage of Canfor’s lower stock prices and wait for fortunes to change.

“Despite being 90 years old, he still invests with a long-term horizon,” Mason said.

Mason said he didn’t expect any major changes to how Canfor operates should Pattison’s bid succeed, because the businessman has already had a guiding hand in the company’s operations.

“I think it’s going to be generally business as usual,” he said.

The one outstanding question he did have was what would happen to Canfor Pulp, which is 54.8 per cent owned by Canfor Corp., but remains a separate, publicly-traded company.

Similarly, RBC Dominion Securities Inc. analyst Paul Quinn said the bid brings up questions about Pattison’s intentions for West Fraser. 

Quinn pointed to a previous analysis arguing combining the two companies would reduce operating costs in B.C. forests while simultaneously creating the world’s largest global lumber company, but said regulatory hurdles would likely block such a merger, despite Pattison already being the largest shareholder in both companies.

With files from Bob Keating and Wil Fundal

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