The trend of B.C. forestry companies buying up American sawmills continues, with Canfor Corporation (TSX: CFP) being the latest to go shopping in the American southwest.
Canfor announced the acquisition September 30 of Southern Lumber Co. Inc. for $48.7 million.The acquisition is expected to be complete by the first quarter of 2015.
Based in Hermanville, Mississippi, the sawmill cuts southern yellow pine. The mill is situated in an area with “exceptionally high quality fibre,” according to a Canfor press release.
"The Southern Lumber sawmill is a top quartile margin business located in an excellent fibre supply area that will provide us with additional higher value opportunities for our global markets," Canfor CEO Don Kayne said. "This, together with an excellent management team, will continue to ensure Canfor's ongoing commitment to our customers."
A dwindling log supply in B.C. has resulted in mill closures in B.C., and the mid-term prospects is for more mill closures and consolidations here in B.C. in the coming decades, as the annual allowable cut shrinks from a peak of 70 million cubic metres per year to 42 million cubic metres per year by 2020.
B.C. forestry companies with healthy balance sheets have been buying up sawmills in the American south, where plantations of yellow pine provide for a reliable log supply.
Earlier this year, Interfor (TSX:IFP.A) announced plans to buy two sawmills and a remanufacturing plant in the U.S. South for $180.
Other B.C. forestry companies, including West Fraser Timber (TSX:WFT), have also acquired American sawmills in recent years.
