Vancouver's CanWel buys Hawaiian wood supplier for US$80 million

CanWel officials say the deal, slated to close early in Q4 2017,  will effectively double the company’s sales in the Unites States.

Vancouver-based CanWel Building Materials Group Ltd. (TSX: CWX) has agreed to purchase Hawaii’s largest pressure-treated wood supplier for US$80 million in cash, officials announced this week.

The transaction, slated to close early in Q4 2017, would bring Honsador Building Products from the ownership of Colorado-based Grey Mountain Partners to CanWel, making Honsador an indirect wholly-owned subsidiary of CanWel.

Honsador was founded in 1935 and operates 14 facilities in Hawaii, distributing building products and electrical supplies to the residential, commercial and military markets. CanWel officials say the deal will effectively double the company’s sales in the Unites States, while at the same time provide CanWel with a valuable entry point into Hawaii’s “robust and captive market with high barriers to entry.”

“The Transaction is a great complement to our existing U.S. operations while further advancing our growth strategy and developing a leadership position on the west coast of the U.S.,” said CanWel chairman/CEO Amar Doman in a written statement.

Current plans, officials say, call for Honsador’s “key management” to remain in place after the deal’s completion.

The purchase - amounting to approximately $100 million in Canadian dollars - is partially funded by CanWel’s existing revolving credit facilities, but also includes funding from a separate private “bought deal” private placement from a group of underwriters led by GMP Securities. 

The placement sees the underwriters agree to purchase the equivalent of 8,550,000 shares of CanWel at a price of $5.85 per share, raising a gross of about $50 million for CanWel.

CWX shares closed on the TSX on Thursday at $6.09 and is trading between $6.12 and $6.06 Friday morning.

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