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.