Canfor Corporation has entered into an agreement with Millar Western Forest Products Ltd. to acquire the company’s solid wood operations and associated tenure for $420 million, including $56 million in working capital, Canfor announced. The purchase price represents a multiple of 3 times 2020 and 2021 average EBITDA. Canfor expects to generate at least $25 million in annual synergies principally related to alignment with the Company’s marketing programs and operational enhancements.
Millar Western’s solid wood operations, located in Alberta, Canada, will add 630 million board feet of production capacity and have access to a globally competitive, high-quality timber supply. The assets consist of three well-capitalized operations including two sawmill complexes in Whitecourt and Fox Creek and the high-value, specialty Spruceland Millworks facility in Acheson that is dedicated to serving strategic markets and generates higher, more stable returns.
Following a successful completion of the transaction, Millar Western will continue to own and operate its bleached chemi-thermomechanical pulp (BCTMP) mill in Whitecourt, while the wood products operations, encompassing a combined workforce of approximately 550 people, would operate as divisions of Canfor. This transaction would position Millar Western to focus on growth opportunities in the pulp sector.
“This transaction, with a company that shares our commitment to working safely, supporting healthy communities, and conducting responsible stewardship of forest resources, will provide great opportunities to the outstanding people in our wood products operations,” said David Anderson, President and Chief Executive Officer of Millar Western. “We are pleased to see these dedicated employees placed on the path to a strong future with Canfor.”
“Millar Western has an excellent reputation for its highly skilled employees, strong commitment to safety, efficient operations and exceptional products. These operations are well aligned with our strategy of growing and diversifying our global operating platform, and we look forward to welcoming them to the Canfor team,” said Don Kayne, President and CEO of Canfor.
Image: MWFP's Operations / Millar Western Forest Products
RBC Capital Markets and Stifel Nicolaus Canada acted as financial advisors to Millar Western. Dentons Canada LLP acted as legal advisor to Millar Western.
Millar Western is founded in 1906 by Western Canadian business pioneer James William (J.W.) Millar, who opens a blacksmith shop in North Battleford, Saskatchewan. In 1920s, J.W. expands into logging and sawmilling in Alberta, moving his family and head office to Edmonton and, in 1926, building his first stationary sawmill on the site that still houses the company’s Whitecourt operations.
