Stella-Jones to acquire McFarland
Stella-Jones Inc. today announced that it has signed a non-binding letter of intent to acquire the shares of McFarland Cascade Holdings, Inc. a provider of treated wood products based in the state of Washington.
The letter of intent contemplates a purchase price of approximately US$230.0 million, which includes approximately US$113.0 million of net working capital and the assumption of certain liabilities. The transaction, if finalized, is expected to close in November 2012 and is subject to customary closing conditions, including entry into a definitive purchase agreement, customary approvals and satisfactory due diligence. Stella-Jones has already received U.S. antitrust clearance with regard to the proposed acquisition. Stella-Jones plans to finance the transaction through a combination of term financing and equity.
Founded in 1916, McFarland is one of North America's long-standing suppliers of utility poles, as well as crossarms, piling and crane mats. It is also a provider of treated lumber for outdoor home projects, including composite decking, railings and related accessories. It serves its customer base through four wood treating facilities located in Tacoma, Washington; Eugene, Oregon; Electric Mills, Mississippi; and Galloway, British Columbia; as well as through an extensive distribution network. McFarland's sales for its fiscal year ended December 31, 2011 were approximately US$255.0 million. Sales for its fiscal year ended December 31, 2012 are expected to reach approximately US$280.0 million and earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2012 are expected to be approximately US$29.0 million.
"The potential acquisition of McFarland would further enhance the range of Stella-Jones' offerings in the North American wood treating industry. A strong commitment to product quality and customer service has been a hallmark of McFarland's business operations, which Stella-Jones is committed to continue and build on," said Brian McManus, President and Chief Executive Officer of Stella-Jones.