Ashfield Industries, Dungaven Acquisition Case

ICBC Finance Practice

Constraints - 3 Hour Time Limit, 10 Slides

Sep 2025

This analysis examined whether acquiring Dungaven Lumber created value for Ashfield Industries amid a late stage lumber cycle and rising leverage. The work combined cycle timing, cash flow durability, and debt capacity to assess whether the acquisition improved or weakened shareholder outcomes. Rather than treating the transaction as a pure growth opportunity, the analysis stressed downside protection, integration risk, and capital structure resilience. The recommendation supported a disciplined, staged acquisition approach that balanced strategic fit with balance sheet preservation in a highly cyclical industry.

Title slide for a presentation titled "Ashfield's Crossroads: Growth Through the Dungaven Acquisition" by Ivan & Edina, with a subheading "Ashfield Weighs."

Slide titled "A 5-Year Cushion, Rapid Deleveraging, and Cycle Recovery" with a subtitle about purchase price structure. Contains three numbered points: 1) Five Years of Protection Creates a True Integration Cushion, 2) Aggressive Deleveraging Transfo

A report titled "The Future Depends on the Lumber Cycle" discussing the lumber price cycle, housing starts, and factors influencing demand and supply with a line graph showing lumber prices and US housing starts from 2000 to 2016, and bullet points i

Diagram illustrating stakeholder groups involved in the Ashfield–Dungaven Deal, including Ashfield Board & Management, Dungaven Family, Ashfield Shareholders, Bank/Lenders, Employees & Communities, and U.S. Trade Authorities, with descriptions of the

Slide titled "How well will two entities integrate?" with three points: 1. Efficient Mills & Surplus Timber Rights, 2. Product Diversification, 3. Geographic Synergies. Footer text states: "Ashfield achieves their goal of efficient use of resources &

A presentation slide titled 'Five years of breathing room, then a fast paydown' with two charts. The first chart, labeled 'FCF to Equity Post-Acquisition,' shows a bar graph from 2016 to 2026, with increased cash flow from 2016 to 2021, a dip in 2022

Chart comparing valuation of Dungaven to other timber companies, showing Dungaven's valuation as 5.4x EV/EBITDA, which is considered overpriced

Flowchart comparing alternatives for Ashfield's staged purchase of a company, including steps like acquiring, not acquiring, staged purchase with cash, purchase upfront, and options to buy or not buy stock or assets, with decisions on hedging or not,

Flowchart outlining the process of acquiring and locking in FX for Ashfield, including negotiating stock purchase, locking in FX via forward contracts, and assessing tariffs damage through financial analysis.

A presentation slide titled 'With locked-in rates, there exist minimal risks' discusses risk mitigation strategies for long-term client contracts. The slide lists three risks: US tariffs, fibre/log supply tightness, and integration & execution risk,