Canfor announced last week the purchase of New South Companies Inc. for $205 million US.
The Myrtle Beach, South Carolina-based company operates three sawmills, two treating plants, a finger joint plant and European lumber import business in North and South Carolina. New South’s annual capacity is 425 million board feet, primarily of southern yellow pine.
However, according to statistics released by the company, 46 per cent of its sales comes from imported European spruce, pine and fir lumber, oriented strand board and glulam.
“Canfor is dedicated to the vision set out by [president and CEO] Jim Shepherd… product diversification, geographic diversification and growing with our customers,” Canfor spokesman Lee Coonfer said. “By getting a foothold in the Carolinas it opens up other opportunities. It’s right in the middle of probably the hottest housing market in the U.S.”
New South primarily sells into the southeastern U.S. but does market southern yellow pine in Japan and China. Canfor expects to net $10 million US annual from synergies gained by owning both companies.
In addition to giving Canfor a presence in the lucrative housing market in the U.S., Coonfer said, it also gives Canfor connects with European lumber exporters.
It also adds a complimentary product to Canfor’s line, he said.
“One of the key attributes of northern [spruce, pine and fir] wood is it is a lightweight, straight wood. Ideal for dimensional lumber,” Coonfer said. “Southern pine is a heavier wood more suitable for treated wood applications.”
Fencing and deck building are both ideal applications of the heavier southern pine, he said.
“The purchase of New South comes with a fleet of 50 trucks,” Coonfer said. “It puts in Canfor’s hands the ability to directly transport products to where they’re needed.”
The delivery truck fleet will augment Canfor’s “just-in-time delivery” network in the region, he added.
New South generated total revenues of $500 million US in 2005 and employes over 500 people.
“We are excited and looking forward to being part of the Canfor team,” New South president and CEO Mark Singleton said in a written statement. “We are confident the expertise and financial strength of Canfor will greatly benefit us.”