Lumber giant Interfor Corp. is buying a sawmill in South Carolina from WestRock Co. for US$59 million in cash.
The news comes as North American lumber prices set new record highs, less than a week after Interfor CEO Ian Fillinger signalled on an earnings call that the cash-rich company is on the hunt for lumber mill acquisitions.
Interfor says the mill it’s buying produced about 125 million board feet of lumber in 2020 but has a permit to expand to about 200 million board feet per year.
As a result of this transaction, Interfor’s total annual lumber production capacity will increase to 3.2 billion board feet, of which 1.7 billion board feet or 55 per cent of the pro forma capacity will be located in the U.S. south.
The transaction is subject to customary conditions and is expected to close in the first quarter of 2021.
Western spruce, pine and fir lumber hit a new record high of US$963 per thousand board feet on Tuesday and the lumber composite price is less than one per cent away from its all-time high set in mid-September.
Interfor says it has identified ways to optimize and increase production at the WestRock mill, noting it is less than 200 kilometres away from two of its existing mills.
“This transaction is a logical tuck-in with our existing U.S. South platform and reiterates Interfor’s commitment to disciplined growth and investment in the US South,” Fillinger said in a news release.