By: The Working Forest Staff
VANCOUVER – West Fraser Timber will acquire the operations of the Gilman Companies from the Howard Gilman Foundation and other shareholders for approximately US$430 million. The Gilman Companies are comprised of six sawmills and a finger‑joint mill in Florida and Georgia, as well as an administrative office in St. Marys, Georgia.
The acquisition is a further step in West Fraser’s continuing expansion of its U.S. lumber operations. Upon completion of this transaction, West Fraser will have combined Canadian and U.S. lumber production capacity of 7.2 billion board feet. Canadian capacity of spruce/pine/fir (SPF) lumber will represent 57 per cent of the company’s capacity and U.S. capacity of southern yellow pine (SYP) lumber will represent 43 per cent.
The transaction, which is also subject to U.S. regulatory approvals and customary conditions, is anticipated to close in the third quarter of 2017.
The operations employ approximately 900 people and have a combined annual production capacity of 700 million board feet of lumber. All of the mills produce lumber from southern yellow pine. In the 12 months ended June 30, 2017 the Gilman Companies generated EBITDA of US$67 million on estimated sales of US$330 million.
“The Gilman Companies’ strong management team combined with high margin operations fits well with our existing U.S. platform of mills,” said West Fraser’s President and CEO, Ted Seraphim. “This is a long‑term strategic move that strengthens our core lumber business and gives us increased scale and geographic diversification.”
Seraphis also said the Gilman acquisition is “a rare opportunity to acquire a U.S. lumber producer of a meaningful scale with high quality facilities and a culture similar to our own.”
West Fraser intends to finance the acquisition with cash on hand, available lines of credit and a new five‑year $200 million credit facility to be made available in connection with the acquisition.
West Fraser is a diversified wood products company producing lumber, LVL, MDF, plywood, pulp, newsprint, wood chips and energy with facilities in western Canada and the southern United States.