- Interfor Corporation (IFP) has reached an agreement with an affiliate of Kelso & Company to acquire 100 per cent of the equity interests of EACOM Timber Corporation (EACOM)
- The purchase price is $490 million, including C$120 million of net working capital
- Interfor will assume EACOM’s countervailing (CV) and anti-dumping (AD) duty deposits at closing, for consideration equal to 55 per cent of the total deposits on an after-tax basis
- The acquisition is consistent with Interfor’s growth-focused strategy as a pure-play lumber producer, increasing Interfor’s total lumber production capacity by 25 per cent
- Interfor’s total annual lumber production capacity will increase to 4.9 billion board feet, 46 per cent being in the U.S. South, 16 per cent in the U.S. Northwest, 20 per cent in eastern Canada and 18 per cent in British Columbia
- Interfor Corporation(IFP) is up 3.28 per cent and is trading at $32.76 per share as of 3:32 p.m. ET
Interfor Corporation(IFP) has reached an agreement to acquire 100 per cent of the equity interests of EACOM Timber Corporation (EACOM).
The purchase price is C$490 million, includes C$120 million of net working capital.
Interfor will assume EACOM’s countervailing (CV) and anti-dumping (AD) duty deposits at closing, for consideration equal to 55 per cent of the total deposits on an after-tax basis.
As of September 30, 2021, EACOM had paid cumulative CV and AD duties of US$150 million.
The acquisition is consistent with Interfor’s growth-focused strategy as a pure-play lumber producer, increasing Interfor’s total lumber production capacity by 25 per cent.
The acquisition further builds upon Interfor’s already geographically diverse operations, adding significant scale in a new region.
Interfor’s total annual lumber production capacity will increase to 4.9 billion board feet, 46 per cent being in the U.S. South, 16 per cent in the U.S. Northwest, 20 per cent in eastern Canada and 18 per cent in British Columbia.
The business will operate under the Interfor banner, but Interfor will maintain all EACOM’s key operating leadership and employees as well as its office in Montreal, Quebec to ensure continued regional support for the operations going forward.
The acquisition will be immediately accretive to Interfor’s earnings and is expected to provide attractive returns in both the near term and over the long term.
EACOM generated EBITDA of $75 million, $8 million, $151 million and $475 million of 2018-2020 and the year ended September 30, 2021, respectively.
Interfor estimates EACOM’s mid-cycle EBITDA to be approximately $90 million per year pre-synergies, considering mid-cycle lumber prices, normalization of operating schedules post-COVID and recent ramp-ups in production and operating performance improvements at both the sawmills and the I-Joist plant.
These synergies are expected to be fully achieved within two years of closing, with no capital requirements.
Interfor intends to finance the acquisition with a combination of cash on hand and its existing credit facilities.
Interfor Corporation (IFP) is up 3.28 per cent and is trading at $32.76 per share as of 3:32 p.m. ET.
