The Rising Influence of Rising Affluence

[DewDiligence]

WY-PCL merger is almost certain to be consummated:

PCL is now trading within a small margin of its implied value in the WY merger (i.e. 1.6 x WY’s share price). The spread is small because this deal is almost certain to close.

There are essentially no antitrust concerns since ownership of US timberlands is highly fragmented and PCL’s non-timberland operations are de minimis.

Moreover, it’s highly unlikely that either company’s shareholders will vote against the merger. Investors who don’t like the deal will be inclined to sell their shares, so by the time the record date for voting arrives, the shareholder base will consist largely of those in favor of the deal.

Finally, WY is probably the only company on the planet with whom PCL would agree to merge, so there is close to a zero chance of another company stepping into the fray.