West Fraser Timber entered an agreement to acquire the Angelina Forest Products lumber mill located in Lufkin, Texas for approximately $300 million. The facility opened in late 2019 and McCoy’s Building Supply was the recipient of one of the plant’s first deliveries.
The transaction includes approximately $4 million of target working capital and approximately $24 million of supplemental tax attributes that are expected to result in a direct cash flow benefit to West Fraser.
The facility produces southern yellow pine lumber (SYP) products and began construction in 2018. West Fraser said the facility is expected to progress towards a full production of approximately 305 million board feet over the next three to four years.
Vancouver, British Columbia-based West Fraser said the acquisition is a part of the company’s continued expansion of U.S. lumber operations. The company expects the facility to be a top quartile mill that will integrate and support West Fraser’s existing east Texas lumber and OSB business. The Lufkin mill, anticipated to be among the lowest cost operations in West Fraser’s lumber mill portfolio, is strategically located near low-cost and abundant fibre and large and growing end markets, according to West Fraser.
Upon completion of the acquisition, West Fraser will have combined Canadian and U.S. lumber production capacity of approximately 7.0 billion board feet, with U.S. capacity of SYP lumber representing approximately 50% of the company’s capacity.
“We look forward to welcoming the Lufkin mill employees to West Fraser. The management team at Angelina Forest Products has done a commendable job developing the Lufin team and operations, and we believe this modern, high-margin facility will enhance our existing U.S. platform of lumber mills and help us to better meet the growing demand for our lumber products in Texas and the U.S. south,” West Fraser president and CEO Ray Ferris said in a prepared statement.
West Fraser intends to finance the acquisition with cash on hand and anticipates to achieve annual synergies of $13 million within two years with minimal capital requirements. The synergies are expected to be realized through continued capacity utilization improvement, implementation of best practices, and the coordinated transportation, logistics, and procurement benefits derived from West Fraser’s distribution scale and existing production facilities in the region.
West Fraser operates more than 60 facilities in Canada, the United States, the United Kingdom, and Europe. The company produces lumber, engineered wood products, pulp, newsprint, wood chips, other residuals, and renewable energy.
