West Fraser Timber Co. Ltd. has entered into an agreement to acquire the operations of the Gilman Companies from the Howard Gilman Foundation and other shareholders for approximately $430 million, subject to certain post-closing adjustments.
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 transaction, which is also subject to U.S. regulatory approvals and customary conditions, is anticipated to close in the 3Q 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.
After considering estimated tax benefits, the purchase price represents approximately six times trailing 12 months EBITDA of the acquired operations. In the 12 months ended June 30, 2017 the Gilman Companies generated EBITDA of $67 million on estimated sales of $330 million.
The acquisition is an important 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% of capacity and U.S. capacity of southern yellow pine (SYP) lumber will represent 43% of capacity.
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.
