Interfor buys 4 sawmills in US$104M deal

VANCOUVER—Lumber company Interfor Corp. will acquire several sawmill operations from Tacoma, Wash.-based Simpson Lumber Co., LLC.

The acquisition includes facilities in Meldrim, G.A., Georgetown, S.C., Longview, Wash., and Commencement Bay, Wash. The upfront cost is US$94.7 million, with a minimum of $10 million in future payments based on how the mill in Commencement Bay performs.

Interfor says the sawmill operations are located within geographic proximity of its current sawmills in both the U.S. Southeast and Pacific Northwest, and will fit within the its existing operating infrastructure.

The operations have a combined annual lumber capacity of 750 million board feet1 and are expected to produce 555 million board feet in 2014, boosting Interfor’s total capacity by 30 per cent to 3.1 billion board feet.

The company’s lumber capacity in the US Southeast and Pacific Northwest will total 1.2 billion board feet and 900 million board feet, respectively, representing 67 per cent of the Interfor’s total capacity.

For the nine months ended September 30, 2014, the Meldrim, Georgetown and Longview sawmills generated combined EBITDA of US$16 million.

For the nine months ended September 30, 2014, the Commencement Bay operation generated EBITDA2 of US$3 million.

“This transaction is another important milestone for Interfor,” said Duncan Davies, Interfor’s President and CEO. He said the deal structure has two distinct components: the acquisition of three profitable sawmills at values that will create immediate accretion; and the acquisition of a fourth sawmill using a contingent payment structure that ties the ultimate purchase price of that sawmill to its future results.”

The completion of the transaction is subject to customary conditions and regulatory approvals and is expected to close in the first quarter of 2015.