Canfor to Acquire Domtar Lumber Mill in El Dorado for $73M

Correction: A previous version of this story incorrectly stated that Anthony Timberlands sold to Canfor in 2015. It was Anthony Forest Products Co. that sold. The two companies are not affiliated. 

Forest products company Canfor Corp. of Vancouver on Wednesday announced a deal to acquire Domtar Corp.’s lumber mill in El Dorado for $73 million.

The facility, which produces dimensional lumber and specialty wood products, would be Canfor’s third in Union County. It also has a laminating plant in El Dorado and a sawmill and planer in Urbana.

In a news release, publicly traded Canfor (TSX: CFP) said it’s planning $50 million in upgrades for the lumber mill, which would increase the mill’s production capacity to to 175 million board feet per year.

The transaction with Resolute El Dorado Inc., an affiliate of South Carolina-based Domtar, is expected to close over the next several months.

Canfor reported a loss of $64.5 million the first quarter, improving on a $142 million loss in the same quarter a year ago. It attributed the results to pressure on lumber markets and pricing, especially Southern yellow pine, which is expected to continue in the second quarter. The company said high home prices have contributed to a decline in U.S. residential construction, but there has been steady activity in the repair and remodel sector.

CEO Don Kayne said the company’s global lumber footprint helped mitigate some of the market-related pressures, as Canfor’s European operations delivered positive results and its western Canadian operations benefited from an uplift in spruce, pine and fire lumber pricing.

“Going forward, we anticipate the benefits of our global diversification strategy to be further enhanced by our acquisition of the El Dorado sawmill in Arkansas, as well as the optimization of our Alabama facilities,” Kayne said.

Canfor has been operating in Arkansas since 2015, when it acquired Anthony Forest Products Co. of El Dorado for $93.5 million.