Tolko Industries Ltd could end up acquiring Riverside Forest Products on the cheap because of the latter’s bulging C$134m bank balance and the prospect of a conclusion to the softwood lumber dispute, according to financial analysts.
Tolko plans to take its C$222m bid before Riverside shareholders, following a rejection of the offer by the company’s board of directors. If approved, it may mean Tolko paying out just C$88m.
An end to the lumber dispute with the US could also see half of the C$100m duties paid out by Riverside returned to the company.
Riverside’s directors said Tolko’s bid “significantly undervalues” the firm but they are open to further discussions.
The spate of acquisitions in the British Columbia forest products sector during the past year has been encouraged by soaring timber prices.