West Fraser Timber Co. Ltd. says it plans to buy back up to $1 billion worth of its shares.

The forestry company says it is conducting a "modified Dutch auction'' with a tender price range of $85 to $98 per share.

The purchase price will be the lowest price within that range that will allow it to buy back the maximum number of shares tendered by shareholders.

West Fraser shares closed at $86.83 on the Toronto Stock Exchange on Tuesday.

The company raised its dividend earlier this year after it reported its first-quarter profit rose, boosted by higher lumber prices.

By buying back its shares, a company spreads profits over fewer shares. That increases its earnings per share, a key ratio used to determine a company's financial strength.