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West Fraser Timber to Acquire US South OSB Mill for USD 280m
Wednesday 27 October 2021

British Columbia-based wood products company West Fraser Timber Co. Ltd. (TSX: WFG) (NYSE: WFG) has agreed to acquire Georgia Pacific's oriented strand board (OSB) mill near Allendale, South Carolina for approximately USD 280m, the company said.

West Fraser intends to finance the acquisition with cash on hand. The total investment for the Allendale acquisition is expected to be at a significant discount to the costs of an equivalent greenfield OSB mill while requiring a shorter time to initial production.

Based on West Fraser's latest internal analysis, the returns of this mill acquisition and investment are expected to be commensurate with those for other capital projects of similar magnitude.

The transaction is anticipated to close following the completion of US regulatory reviews and satisfaction of customary conditions.

The company intends to invest an estimated USD 70m of additional capital to upgrade and optimise the Allendale facility in preparation for its restart and this upgrade is anticipated to take approximately nine months to complete.

The Allendale acquisition offers another opportunity for West Fraser to create value by deploying the company's expertise at reinvesting in and restarting idled OSB mills.

West Fraser is a diversified wood products company with more than 60 facilities in Canada, the United States, the United Kingdom, and Europe.

From responsibly sourced and sustainably managed forest resources, the company produces lumber, engineered wood products (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy.

West Fraser's products are used in home construction, repair and remodelling, industrial applications, papers, tissue, and box materials.
Date Published: 27/10/2021