GLOBAL - Two pension fund managers have acquired western Canada's largest timber company for CAD1.3bn (€900m).
Under the terms of the deal, the British Columbia Investment Management Corporation (BCIMC) and the Public Sector Pension Investment Board offered a price premium for TimberWest of 25% over the weighted average trading price when the offer was made back in April.
BCIMC, with assets under management worth CAD86bn, manages public sector pension schemes, insurance firms and public trusts. PSP represents Canada's armed services.
The two pension schemes said they had targeted the firm for acquisition because it would generate investment returns commensurate with long-term liabilities.
BCIMC views the investment as a "complement" to existing investments in alternatives, including real estate, which "exhibit inflation-hedging characteristics and provide stable risk-adjusted returns".
The scheme also invests in infrastructure.
BCIMC chief investment officer Doug Pearce said in a statement the deal offered the firm "fair value, immediate liquidity and a premium" to existing shareholders. It already holds 22.5% of the firm in convertible debentures.
TimberWest chief financial officer Robert Allen was unavailable for interview today, but in an earlier letter to shareholders, the firm described the deal as providing "certainty of value".
A 'go shop' process that allowed it 60 days to solicit a better offer failed to come up with one.
Allen said: "The absence of a superior proposal indicates that the transaction maximises unit-holder value."
Although 98% of shareholders approved the deal - well above the 67% majority required - the acquisition has provoked criticism from human rights groups, including Amnesty International.
The Hul'qumi'num Treaty Group (HTG), which represents six tribal nations, protested outside the shareholder meeting over what they believe to be a grab of traditional lands.
TimberWest said it had disclosed ongoing treaty processes and consultations with the new owners.