Canfor acquiring Millar Western Forest Products

Canfor Corporation reported that it has entered into an agreement with Millar Western Forest Products Ltd. 

Under terms of the deal, Canfor will acquire Millar Western’s solid wood operations and associated tenure for 420 million Candian dollars (US$324 million), including C$56 million (US$43.20 millon)in working capital. 

The purchase price represents a multiple of 3 times 2020 and 2021 average EBITDA. 

Canfor said that it expects to generate at least C$25 million (US$19.29 million) in annual synergies principally related to alignment with the company’s marketing programs and operational enhancements. 

Millar Western’s solid wood operations, located in Alberta, Canada, will add 630 million board feet of production capacity and have access to a globally competitive, high-quality timber supply. 

The assets consist of three well-capitalized operations including two sawmill complexes in Whitecourt and Fox Creek and the Spruceland Millworks facility in Acheson.

“The acquisition of Millar Western’s solid wood operations, including the highly successful Spruceland Millworks facility, is well aligned with Canfor’s strategy to grow and diversify our global operating platform,” said Don Kayne, president and CEO of Canfor. “We are excited to expand our Alberta operations to meet the growing demand of our customers for high-quality and sustainable wood products.”

Canfor said that it expects to finance the transaction with cash and liquidity on hand. The deal is expected to close in the first quarter of 2022 and is subject to customary closing conditions including regulatory approvals. 

Based in Vancouver, British Columbia, Canfor is an integrated forest products company based with operations in Alberta, North and South Carolina, Alabama, Georgia, Mississippi, Arkansas, and Louisiana, as well as in Sweden with 70% interest in Vida Group.

Canfor produces primarily softwood lumber and also owns a 54.8% interest in Canfor Pulp Products Inc.