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West Fraser downplays acquisition speculation

West Fraser shares soar on speculation it could be acquired
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West Fraser CEO Ray Ferris, right, and Canfor CEO Don Kayne at a Council of Forest Industries (COFI) conference in April. | Nelson Bennett

West Fraser Timber Co. (TSX,NYSE:WFG) is downplaying speculation it could be acquired.

West Fraser's shares spiked this morning, following a Reuters report that CVC Capital Partners, based in Luxembourg, and Kronospan had joined forces to buy out the Canadian lumber giant. The Reuters story cited "people familiar with the matter" who said the two companies had submitted "a joint expression of interest."

Kronospan, a UK-based wood panel company, is a West Fraser shareholder. West Fraser's shares spiked more than 14% this morning from about $107.94 per share to $124 per share.

In a terse statement released early this afternoon, West Fraser downplayed the "recent market and media speculation."

"Although the company has previously met with Kronospan, an existing shareholder, and CVC Capital Partners, the company has not received a proposal and there are no ongoing discussions regarding the terms of any transaction," the company said.

Record high lumber prices have left West Fraser swimming in cash, and shareholders being redwarded with share buybacks.

Last year, West Fraser bought back $1 billion worth of shares in a substantial issuer bid, which rewards shareholders by buying their shares at a premium. Last month, it bought back another US$1.13 billion ($1.45 billion Canadian) of shares in a second substantial issuer bid. According to West Fraser's first quarter financials, the company had $2.4 billion in sales, and ended the quarter with $2.551 billion in liquidity.

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