Canfor Corporation (TSX:CFP) is announcing that it has entered into an agreement with Millar Western Forest Products Ltd. (“Millar Western”) to acquire the company’s solid wood operations and associated tenure for $420 million, including $56 million in working capital. The purchase price represents a multiple of 3 times 2020 and 2021 average EBITDA. Canfor expects to generate at least $25 million in annual synergies principally related to alignment with the Company’s marketing programs and operational enhancements.
Millar Western’s solid wood operations, located in Alberta, Canada, will add 630 million board feet of production capacity and have access to a globally competitive, high-quality timber supply. The assets consist of three well-capitalized operations including two sawmill complexes in Whitecourt and Fox Creek and the high-value, specialty Spruceland Millworks facility in Acheson that is dedicated to serving strategic markets and generates higher, more stable returns.
“The acquisition of Millar Western’s solid wood operations, including the highly successful Spruceland Millworks facility, is well aligned with Canfor’s strategy to grow and diversify our global operating platform. We are excited to expand our Alberta operations to meet the growing demand of our customers for high-quality and sustainable wood products,” said Don Kayne, President & CEO, Canfor. “We look forward to welcoming Millar Western’s dedicated and skilled employees to the Canfor team.”
Canfor anticipates financing this transaction with cash and liquidity on hand. The transaction is expected to close in the first quarter of 2022 and is subject to customary closing conditions including regulatory approvals.