Western Canadian lumber producer Interfor Corp. is expanding eastwards. It reached a deal to buy Eacom Timber Corp. for $385 million (U.S.), a lumber manufacturer that serves some of Canada’s hottest housing markets.
Interfor will acquire Eacom from an affiliate of U.S. private equity firm Kelso & Co., gaining operations in Ontario and Quebec. Eacom’s assets include seven sawmills with annual capacity of 985 million board feet and a remanufacturing plant.
The deal will boost Interfor’s lumber output capacity by 25 percent and growth beyond its existing markets in Western Canada, the U.S. South and Pacific Northwest.
“The opportunity for future growth in that region is attractive to us,” said Chief Executive Officer Ian Fillinger. “We’re sure that from having that presence there will lead to further discussions, just like it has in the U.S. South.”
Interfor will immediately have access to the housing market in Toronto, Canada’s most populous city.
“We see some fundamentals that are very strong going forward,” said Fillinger. Demand for homebuilding “looks promising” as more people fix up their homes amid the pandemic, he said.
Lumber prices touched record highs earlier this year amid a Covid-19 fueled homebuilding boom, then collapsed as sawmills ramped up production and high prices stifled demand.
Futures are still up more than 20 percent from a year earlier. Frenzied home buying in Canada earlier this year made the nation’s housing market among the hottest in the world.
Canadian lumber producers in recent years have been expanding capacity in the U.S. South, where timber plantations are plentiful and log prices are lower than in Canada’s westernmost province of British Columbia.