ESTILL, S.C. - Canadian wood product leader Canfor Corp. has purchased South Carolina-based Elliott Sawmilling Co. for $110 million.
The purchase price represents a 4.3 times earnings before interest, tax, depreciation, and amortization (EBITDA) multiple based on Elliott's twelve months trailing EBITDA. The transaction will be completed in two phases with 49 percent being acquired on closing and 51 percent being acquired one year later.
Elliott has a production capacity in excess of 210 million board feet and the sawmill consists of both large and small log lines. The company sells yellow pine and other pine products and provides forestry services.
"We are thrilled to welcome the employees of Elliott to the Canfor team. Elliott has an excellent management team and produces high-quality products that will align well with Canfor's high-value product mix. Nash Elliott will continue as the General Manager after the transaction is completed," said Don Kayne, president and CEO of Canfor. "The purchase of Elliott will further expand our production capacity to meet the growing demand of our customers."
The transaction is expected to close in the first half of 2019 and is subject to confirmatory due diligence, completion of certain transaction documents and other customary closing conditions.
Canfor recently announced it would curtail sawmill operations in British Columbia during Q4 2018 due to log supply constraints, log costs and current market conditions. The curtailment is expected to reduce Canfor’s BC production output by approximately 10 percent throughout the quarter.
Canfor has 13 sawmills in Canada, with total annual capacity of approximately 3.8 billion board feet.
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