Interfor Corp. is moving forward with a record-price-fueled strategy to increase US lumber production as the US prepares to increase softwood lumber duties on Canadian imports to to protect their domestic producers.
The Burnaby, British Columbia-based company announced it would purchase four sawmills for US $ 375 million, including working capital, in Mississippi, Alabama, Louisiana and Oregon from Georgia-Pacific Wood Products LLC. and GP Wood Products LLC.
In March, it struck a deal to buy a sawmill in South Carolina from WestRock Co. for US $ 59 million.
The acquisitions were paid for with cash.
Georgia-Pacific deal is expected to increase Interfor’s annual lumber production capacity from 720 million board feet to 3.9 billion board feet, 77% of which will be US-based and untaxed softwood lumber duties.
Last week, the United States Department of Commerce recommended higher tariffs which, if finalized later this year, would more than double the “all others” countervailing and anti-dumping rate to 18.32 percent against 8.99 percent.
In a research report, CIBC analyst Hamir Patel points out that the acquisition is near the top of the market, but the price is reasonable.
“This acquisition reinforces Interfor’s growth-oriented strategy as a pure lumber producer and offers significant economies of scale given the geographic complementarity with our existing US operations,” said CEO Ian Fillinger in a new version.
Interfor says it will still have “significant financial flexibility” to consider other growth options following the latest acquisitions.
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