One of the largest lumber companies in the world has acquired Georgia-Pacific’s sawmill in Philomath, Interfor Corporation announced Thursday through a press release.
“Interfor has communicated with us that they will offer employment to all of the employees at the facilities that are part of this purchase,” CJ Drake, Georgia-Pacific public affairs manager said. “The Philomath operation currently employs 125 people.”
Interfor Corp., based in Vancouver, British Columbia, also acquired mills in Bay Springs, Mississippi, Fayette, Alabama, and DeQuincy, Louisiana. The company reported the total purchase price of the four sawmills at $375 million, which includes working capital and will be funded entirely from cash on hand.
Interfor officials said in the release that the sawmill operations “are highly complementary to Interfor’s existing platforms in the U.S. South and the U.S. Northwest, and the acquisition will support accelerated growth and enhance the company’s position to benefit from robust market conditions.”
The company also stated that it expects attractive returns in both the near-term and over the long-term.
“This acquisition enhances Interfor’s growth-focused strategy as a pure-play lumber producer, and provides significant economies of scale given the complementary geographic fit with our existing U.S. operations,” said Ian Fillinger, president and chief executive officer. “We’re excited to acquire these high-quality assets as part of our balanced approach to capital allocation to drive shareholder value.”
The sawmill operations have a combined annual lumber production capacity of 720 million board feet.
The Philomath, Bay Springs and Fayette sawmills are currently operating on a full-shifting basis. The DeQuincy sawmill, which was idled in May 2020 during the COVID-19 pandemic, has an annual capacity of 200 million board feet. Interfor stated that it is currently evaluating its strategy and options for the site, including re-start plans.
On a pro-forma basis, Interfor’s total annual lumber production capacity will increase to 3.9 billion board feet, of which 3.0 billion board feet or 77% will be U.S.-based and not subject to softwood lumber duties, the company stated. Interfor’s U.S. South production capacity will grow by 500 million board feet, or 29%, to 2.2 billion, while production capacity in the U.S. Northwest will grow by 220 million, or 40%, to 770 million board feet.
Following the transaction, the company said that 57% of Interfor’s production capacity will be in the U.S. South, 20% will be in the U.S. Northwest and the remaining 23% will be in British Columbia.
Completion of the acquisition is subject to customary conditions and regulatory approvals for a transaction of its kind and is expected to close in the third quarter of 2021.
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