Interfor snaps up Eastern Canadian lumber company

BC forestry majors continue their expansion outside of BC

EACOM's Elk Lake sawmill in James, Ontario is one of seven mills Interfor is acquiring. | EACOM Twitter

Interfor Corp. (TSX:IFP) has reached an agreement to acquire 100% of EACOM Timber Corp. for $490 million, which adds seven sawmills in Eastern Canada with an annual capacity of nearly 1 billion board feet to Interfor's suite of sawmills.

It is just the latest in a series of acquisitions by B.C. three forestry majors outside of B.C. over the last decade.

Interfor, Canfor Corp. (TSX:CFP) and West Fraser Timber Co. Ltd. (TSX:WFT) have been acquiring sawmills in recent years in the U.S. More recently, some have been acquiring other large Canadian companies.

Last year, for example, West Fraser acquired Ontario-based Norbord for $4 billion.

In addition to seven sawmills, the acquition includes an I-Joist plant with annual production capacity of 70 million linear feet, a remanufacturing plant and 3.6 million cubic meters of timber annually.

“This transaction makes Interfor a truly North American lumber producer, with operations in all the key fibre regions on the continent, further diversifying and de-risking our operating platform and enhancing our growth potential and opportunity set,” Interfor CEO Ian Fillinger said in a press release.

“This transformational growth secures a desirable SPF (spruce-pine-fir) product mix to meet the growing demand of our customers, at a time when SPF fibre supply is under increasing pressure in other jurisdictions in North America and around the world."

That pressure is particularly pronounced in B.C., where a declining annual allowable cut and high stumpage costs have resulted in sawmill closures -- this at a time when the demand for lumber in North America have pushed lumber prices to all-time highs.

"Eastern Canada is one of the major lumber producing regions in North America, with highly competitive log costs, a desirable SPF product mix and a supportive investment environment," Interfor notes in its press release.