VANCOUVER, July 26, 2017 /CNW/ - West Fraser Timber Co.
Ltd. today announced that it has entered into an agreement to acquire the operations of the Gilman Companies from the Howard
Gilman Foundation and other shareholders for approximately US$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 third quarter of 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 US$67 million on estimated sales
of US$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.
"We look forward to welcoming our new employees to the West Fraser organization. The Gilman Companies' strong management
team combined with high margin operations fits well with our existing U.S. platform of mills," said West Fraser's President and
CEO, Ted Seraphim. "This is a long‑term strategic move that strengthens our core lumber business and gives us increased
scale and geographic diversification. Growing our lumber business has been one of our key strategic goals," said Mr.
Seraphim. "This is a rare opportunity to acquire a U.S. lumber producer of a meaningful scale with high quality facilities
and a culture similar to our own."
Comments from The Howard Gilman Foundation
"We are delighted to announce this transaction" said Mary Farrell, President of The Howard
Gilman Foundation. "West Fraser is a leader in the North American forest products industry, and through them, we have found
a true partner for Gilman Building Products capable of providing strategic expertise and capital to grow and modernize the
business. The Foundation has been a proud steward of the Company for nearly 20 years and believes that a combination with
West Fraser will deliver long‑term benefits to our loyal and long serving employees and the communities in which we operate.
On behalf of the Directors, we would like to extend our sincere appreciation to all of the Gilman employees who have worked so
tirelessly to ensure the success of Gilman Building Products. This transaction will enable the continuation of the
charitable mission of the Foundation and ensure Howard Gilman's philanthropic legacy for many,
many years to come."
Transaction Financing and Synergies
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.
Annual synergies of approximately US$10 million are anticipated to be achieved within three
years as a result of this transaction. The synergies are expected to be achieved through non‑capital operational
improvements and through implementation of best practices. The acquired mills also provide an attractive pipeline of high
payback capital projects over the next three to five years.
The Company
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.
Forward‑Looking Statements
This release contains historical information, descriptions of current circumstances and statements about potential future
developments including statements regarding the anticipated timing and benefits of the transaction between the Company and the
Howard Gilman Foundation and other shareholders, the availability of the new credit facility, and anticipated synergies and the
manner of achieving such synergies. The latter, which are forward‑looking statements, are presented to provide reasonable
guidance to the reader but their accuracy depends on a number of assumptions and is subject to various risks and
uncertainties. Actual outcomes and results will depend on a number of factors that could affect the ability of the Company
to execute its business plans, including those matters described in the 2016 annual Management's Discussion & Analysis
under "Risks and Uncertainties", and may differ materially from those anticipated or projected. In addition, assumptions on
which such forward‑looking statements are based include the timely receipt of regulatory approvals and no adverse regulatory
decisions, the timely and successful integration of the Company and the Gilman Companies and the accuracy and completeness of
information provided to the Company in respect of the Gilman Companies. There can be no assurance that the proposed
transaction will occur or that the anticipated strategic benefits and synergies will be realized in their entirety, in part or at
all. Accordingly, readers should exercise caution in relying upon forward‑looking statements and the Company undertakes no
obligation to publicly revise them to reflect subsequent events or circumstances, except as required by applicable securities
laws.
Conference Call
West Fraser will host a conference call for the investment community on Thursday, July 27, 2017
at 9:00 a.m. Pacific time/12:00 p.m. Eastern time. Participants
may access the call by dialing 1-888-390-0546 (toll‑ free North America). The call may
also be accessed through West Fraser's website at www.westfraser.com. Supporting presentation materials will be available on the Investors page of our
Company's website at www.westfraser.com.
West Fraser shares trade on the Toronto Stock Exchange under the symbol: "WFT".
SOURCE West Fraser Timber Co. Ltd.
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