West Fraser Timber acquires sawmills from the Howard Gilman Foundation

West Fraser Timber announced that it has entered into an agreement to acquire the operations of the Gilman Companies from the Howard Gilman Foundation and other shareholders for approximately USD 430 million. The transaction, which is also subject to U.S. regulatory approvals and customary conditions, is anticipated to close in the third quarter of 2017.

According to the announcement, the Gilman Companies are comprised of six sawmills and a finger-joint mill in Florida and Georgia as well as an administrative office in St. Marys, Georgia. After considering estimated tax benefits, the purchase price represents approximately six times trailing 12 months EBITDA of the acquired operations. In the 12 months ended June 30, 2017 the Gilman Companies generated EBITDA of USD 67 million on estimated sales of USD 330 million.

The operations employ approximately 900 people and have a combined annual production capacity of 700 million board feet of lumber. All of the mills produce lumber from southern yellow pine.

Upon completion of the transaction, the company expects to increase its combined Canadian and US lumber production capacity to 7.2 billion board feet. Canadian capacity of spruce/pine/fir (SPF) lumber will represent 57% of capacity and US capacity of southern yellow pine (SYP) lumber will represent 43% of capacity.

Ted Seraphim, President and CEO of West Fraser, commented:

“We look forward to welcoming our new employees to the West Fraser organization. The Gilman Companies’ strong management team combined with high margin operations fits well with our existing US platform of mills. This is a long-term strategic move that strengthens our core lumber business and gives us increased scale and geographic diversification. Growing our lumber business has been one of our key strategic goals. This is a rare opportunity to acquire a US lumber producer of a meaningful scale with high quality facilities and a culture similar to our own.”

In 2Q2017 West Fraser increased Adjusted EBITDA margin to 23.1%.

Check other wood business-related companies 2Q2017 schedules for financial and operating results.

Earlier West Fraser suspended operations in Canada due to wild fires in the nearby.

About West Fraser Timber:

The company is an integrated wood products company producing lumber, wood chips, LVL, MDF, plywood, pulp and newsprint. The Company has operations in western Canada and the southern United States.

Source: Woodbizforum