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Boise makes Forex bid
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July 28, 1999: 2:40 p.m. ET
Building materials company vies with Louisiana-Pacific for Canadian firm
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NEW YORK (CNNfn) - Boise Cascade Corp., one of the largest U.S. forest products companies, Wednesday challenged Louisiana-Pacific Corp.'s buyout offer for the Canadian firm Le Groupe Forex, bidding up to C$31 per share in a deal that would total approximately C$700 million (US$470 million) plus the assumption of Forex debt.
Le Groupe Forex is Canada's leading producer of oriented strand board, or OSB, paneling.
Forex said in a statement its board of directors determined that the Boise Cascade (BCC) offer was "superior" to the C$26 cash-per-share offer made by Portland, Ore.-based Louisiana-Pacific (LPX) at the end of June. As a result of agreements made at the time of that offer, Louisiana-Pacific has five business days to match or better the Boise Cascade offer.
A Louisiana-Pacific spokesman told CNNfn the company is moving ahead with regulatory filings related to its acquisition offer and will analyze the Boise Cascade bid.
In a statement issued later in the day, the Portland company also said that if Forex enters into an agreement with Boise or any third party and Louisiana-Pacific decides it is unable to purchase the Canadian company for a price that is in the best interest of Louisiana-Pacific shareholders, then it is entitled to a break-up fee from Forex of C$23 million (US$15.2 million).
Forex said it has until Aug. 9 to formally accept the Boise offer.
Boise deal accretive to earnings
Boise said the deal, if accepted, would be immediately accretive to earnings and would generate a cost-of-capital return on investment, presuming prices hold up for building materials.
"A key goal of our building products strategy has been to earn our cost of capital over the business cycle," George J. Harad, Boise's chairman and chief executive, said in a statement.
"We have exceeded this goal and believe the addition to our system of the excellent business built by Forex -- low-cost, competitive facilities and wood basket -- would enhance our ability to do so in the future."
Under the terms of the offer, Boise Cascade would buy all of Le Groupe Forex's 23 million fully diluted shares. Shareholders in the Canadian firm would be given the option to receive C$30 (US$19.84) per share in cash or installment notes payable over five years with interest, or C$31 (US$20.51) per share of value in Boise Cascade stock.
Boise Cascade, one of the largest structural panel producers in North America, said it previously has proposed building new OSB capacity in Chile.
Shares in Boise Cascade fell 1-15/16 to 39 in midafternoon trade on Wednesday. Louisiana-Pacific slipped 13/16 to 22 7/16.
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