Vancouver-based West Fraser Timber Co. Ltd. buys back and cancels $1 billion in shares

The forest company says the purchase accounted for 8.7 percent of all shares when it announced its substantial issuer bid in early July

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      One of the bigbest business stories of 2021 has been the rapid run-up in lumber prices.

      They peaked at more than US$1,600 per 1,000 board feet in early May, fatting the treasuries of many forest companies.

      That included Vancouver-based West Fraser Timber Co. Ltd.

      So in early July, West Fraser announced that it was going to buy back and cancel shares in a "substantial issuer bid". This is a legal manouevre that enables companies to efficiently distribute excess cash to shareholders.

      Today, West Fraser revealed the results. It bought 10,309,278 common shares at $97 per share and then cancelled them. The aggregate purchase price was a whopping $1 billion.

      It amounted to 8.7 percent of all the company's shares, according to a company news release.

      The stock is now trading at $85.94. That's 11.4 percent lower than what investors collected from each share sold in the substantial issuer bid.


      In the meantime, lumber prices have come crashing back down to earth since May. See the five-year chart below.

      This five-year chart shows how sharply lumber prices have fallen since hitting an all-time high in early May.
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