Canfor Corporation announced today that it has entered into a phased purchase agreement with Scotch & Gulf Lumber, LLC. Headquartered in Mobile, Alabama, Scotch Gulf’s primary operations consist of three sawmills in Mobile, Fulton and Jackson, Alabama, producing Southern Pine dimension lumber products.
With origins dating back 125 years, Scotch Gulf is one of the premier Southern Yellow Pine producers in the southern U.S. Reflecting planned near-term capital investments, the operation has a combined production capacity of 440 million board feet.
The transaction involves the phased purchase by Canfor of Scotch Gulf over a three-year period, at an aggregate purchase price, excluding working capital, of $80 million. Canfor’s initial 25% interest will increase over the three year period to 50% after 18 months and 100% at the end of the term.
“This agreement provides access to an exceptional fibre base, increases our Southern Pine production capacity to more than a billion board feet and will improve our ability to serve our valued US customers,” said Canfor President and CEO Don Kayne. “Scotch Gulf’s values and approach to the market are closely aligned with those of Canfor, and we are extremely pleased to have been given this opportunity to work with the Scotch Gulf management team to integrate that company’s operating assets and extensive history with our broader North American operations.”
The transaction is subject to standard closing conditions and is expected to close in the third quarter of 2013.