West Fraser Expands US Footprint By Acquiring Six More Sawmillsadmin
The Gilman Companies’ assets comprises of six sawmills and a finger-joint mill spread across Florida and Georgia.
VANCOUVER (Scrap Monster): B.C-based West Fraser Timber Co. Ltd. has announced that it has entered into an agreement to acquire US lumber business for a sum of $430 million. The company will acquire the assets of the Gilman Companies from the Howard Gilman Foundation and other shareholders. The transaction is subject to regulatory approvals and customary conditions and is expected to close during third quarter this year.
The Gilman Companies’ assets comprises of six sawmills and a finger-joint mill spread across Florida and Georgia. The transaction will add all these seven facilities into West Fraser’s roster of US operations. All these operations have a combined annual production capacity of 700 million board feet of lumber and employ approximately 900 people. The total sales during the one-year period ended 30th June, 2017 had totaled US$ 330 million with an EBITDA of US$67 million. It also has an administrative office in St. Mary’s, Georgia.
The company press release issued by West Fraser noted that the acquisition will be financed mainly with cash on hand and available lines of credit. In addition, it will also make use of the new five-year $200 million credit facility to finance the deal. The transaction is expected to generate synergies amounting to nearly US$ 10 million per annum within three years of acquisition.
The acquisition is part of West Fraser’s efforts to expand its US lumber operations. Further to completion of the transaction, West Fraser’s combined lumber production capacity from its mills in the southern US and western Canada is expected to reach nearly 7.2 billion board feet, with the US capacities accounting for 43% of the total capacity.
Ted Seraphim, West Fraser’s President and CEO stated that the high margin operation of the Gilman Companies fits well with its existing mills in the US. The long-term strategic move by the company is clearly aimed at strengthening its core lumber business. The deal involves acquisition of high quality facilities and will result in providing West Fraser with immense geographic diversification, Seraphim added. It must be noted that the company already has more than a dozen of operating facilities in the US.
Meantime, Mary Farrell, President of The Howard Gilman Foundation noted that it is very much delighted to announce the transaction with West Fraser-a true leader in North American forest products industry. The association with West Fraser will bring in long-term benefits to its employees and the communities in which it operates, Farrell added.
West Fraser Timber Co. Ltd. had reported record sales and operating earnings during the second quarter of 2017. The earnings had surged higher by 19% over the previous quarter. Also, the Q2 ’17 earnings were up considerably by 49% from the corresponding quarter last year.