Interfor buying four GP sawmills
Candian lumber producer Interfor reported that it has reached an agreement with Georgia-Pacific Wood Products LLC and GP Wood Products LLC to acquire four of its sawmill operations.
The mills are located in Bay Springs, Miss.; Fayette and DeQuincy, La; and Philomath, Ore.
The total purchase price of US$375 million, which includes working capital, will be funded entirely from cash on hand.
Interfor said the sawmill operations are highly complementary to its existing platforms in the U.S. South and Northwest, and the acquisition will support accelerated growth and enhance the Company’s position to benefit from robust market conditions.
“This acquisition enhances Interfor’s growth-focused strategy as a pure-play lumber producer, and provides significant economies of scale given the complementary geographic fit with our existing U.S. operations,” said Ian Fillinger, president and CEO. “We’re excited to acquire these high-quality assets as part of our balanced approach to capital allocation to drive shareholder value.”
The sawmill operations have a combined annual lumber production capacity of 720 million board feet. The Bay Springs, Fayette and Philomath sawmills are currently operating on a full-shifting basis.
The DeQuincy sawmill, which was idled in May 2020 during the COVID-19 pandemic, has an annual capacity of 200 million board feet. Interfor said that is currently evaluating its strategy and options for the site, including re-start plans.
On a pro-forma basis, Interfor’s total annual lumber production capacity will increase to 3.9 billion board feet, of which 3 billion board feet or 77% will be U.S.-based and not subject to softwood lumber duties.
Interfor’s U.S> South production capacity will grow by 500 million board feet, or 29%, to 2.2 billion, while production capacity in the U.S. Northwest will grow by 220 million, or 40%, to 770 million board feet.
Following the transaction, 57% of Interfor’s production capacity will be in the South, 20% will be in the Northwest and the remaining 23% will be in British Columbia.
The sawmill operations, excluding the DeQuincy sawmill, generated $53 million of EBITDA in the first quarter of 2021, reflecting an EBITDA margin of $508 or $643 per thousand board feet. This compares favorably with Interfor’s EBITDA margin of $589 per thousand board feet for the same period.
Based in Burnaby, British Columbia, Interfor has an annual production capacity of approximately 3.2 billion board feet.