Reuters is reporting that CVC Capital and Kronospan have submitted a joint expression of interest in acquiring West Fraser Timber, BMO Capital analyst Mark Wilde tells investors in a research note. Using a 7.5-times multiple of BMO’s mid-cycle estimated EBITDA of $1.318B yields a takeout value of $125-$130 per share, says the analyst. Wilde adds that any type of “control premium” for the wood industry’s “highest margin franchise would be incremental.” With West Fraser’s capacity centered in North America with modest panel operations in Scotland, the Netherlands and Belgium, the analyst does not foresee any regulatory hurdles. He keeps an Outperform rating on West Fraser with a $112 price target. The stock in morning trading is up 18%, or $14.79, to $97.84.
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