Canfor Goes Shopping
Saturday, June 1, 2013 @ 3:51 AM
Prince George, B.C.- Canfor has wrapped up the sale of one interest, and entered into a deal to buy another.
Yesterday, Canfor announced it had completed the deal which has Louisiana Pacific buying Canfor’s 50% share in the Peace Valley OSB plant in Fort St. John. The proceeds of that sale are said to be in the $77 million dollar range.
Hot on the heels of that announcement, Canfor says it has entered a deal to buy Scotch & Gulf Lumber, LLC. The company has its headquarters in Mobile Alabama, with its primary operations being three sawmills located in Mobile, Fulton and Jackson Alabama. The mills have a combined production capacity of 440 million board feet of Southern Yellow pine dimension lumber.
The purchase will be phased over three years, with a price tag of $80 million.
Canfor’s initial 25% interest will increase over the three year period to 50% after 18 months and 100% at the end of the term.
In a release, Canfor President and CEO Don Kayne says, "This agreement provides access to an exceptional fibre base, increases our Southern Pine production capacity to more than a billion board feet and will improve our ability to serve our valued US customers."
The deal is expected to close in the 3rd quarter of this year.
Comments
Great analysis by Peter Schiff on the state of the housing market in the United States:
http://www.safehaven.com/article/29997/the-great-reflation
The future of lumber production is in areas where tree’s grow fast. The Southern US is one of these places.
And BC’s annual allowable cut isn’t growing so Canfor is jumping off the ship before it sinks.
Moving their roots to the USA in competition with our local forest workers!
Nobody can compete with our forestry workers, except when it comes to labour costs.
I see a bit different picture to this. As each of the largest lumber producers buy up properties on both sides of the border, it’s not hard to envision that once these companies get a large enough market share they will simply demand the US govt scrap the softwood lumber tariffs entirely. They’ll argue that they would basically be paying a tariff against themselves. It will only be a question of how many politicians Canfor, West Fraser , Hampton & Wheyerhaeuser can put in their back pockets.
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