West Fraser acquires Texas mill for $300 million
West Fraser Timber Co. Ltd. has entered into an agreement to acquire the Angelina Forest Products lumber mill located in Lufkin, Texas for approximately $300 million.
“We look forward to welcoming the Lufkin mill employees to West Fraser. The management team at Angelina Forest Products has done a commendable job developing the Lufkin team and operations, and we believe this modern, high-margin facility will enhance our existing U.S. platform of lumber mills and help us to better meet the growing demand for our lumber products in Texas and the U.S. South,” said West Fraser’s President and CEO, Ray Ferris. “With this acquisition, we will be able to quickly capitalize on a fully-invested and high-quality manufacturing facility. This includes a trained labour force and the local community and logistics infrastructure to support the mill’s supply chain, distribution and outlet for residuals. Further, we are able to immediately reap the cash flow benefits of our investment while significantly reducing the associated risks of greenfield construction, execution and start-up.”
The transaction is anticipated to close following successful completion of U.S. regulatory reviews and satisfaction of customary conditions.
The new turn-key facility, which produces southern yellow pine lumber products, began construction in 2018, commenced operations in late 2019 and is expected to progress toward full production capacity of approximately 305 million board feet over the next three to four years.
The transaction includes approximately $4 million of target working capital and approximately $24 million of supplemental tax attributes that are expected to result in a direct cash flow benefit to West Fraser.
The acquisition is another important step in West Fraser’s continued expansion of its U.S. lumber operations. The new, highly efficient facility is expected to be a top quartile mill that will integrate with and support the existing East Texas lumber and OSB business.
Anticipated to be among the lowest cost operations in the company’s lumber mill portfolio, the Lufkin mill is strategically located near low-cost and abundant fibre as well as large and growing end-markets and its additional lumber production will allow West Fraser to better serve the company’s growing customer base in Texas and the southern U.S.
West Fraser will have combined Canadian and U.S. lumber production capacity of approximately 7.0 billion board feet, with U.S. capacity of SYP lumber representing approximately 50 per cent of the Company’s capacity.