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West Fraser Timber planning to take over Gilman for $430m

11.08.2017 − 

West Fraser Timber came to an agreement with the Howard Gilman Foundation and other shareholders on 26 July on taking over Gilman Companies for a total of around $430m. Gilman Companies operate a total of six sawmills in Georgia and Florida with a combined annual production capacity of roughly 700m bdft of southern yellow pine (SYP) timber as well as a works for manufacturing finger-jointed solid-wood products. The number of employees is around 900.

The takeover is scheduled to go through before the end of the third quarter but is still subject to approval from the US authorities and the usual conditions precedent. According to information from West Fraser Timber, the acquisition is to be funded with cash and existing lines of credit as well as by taking out a new five-year loan of $200m.

Gilman Companies generated sales revenue of some $330m in the twelve months from 1 July 2016 to 30 June 2017 and achieved EBITDA of $67m. West Fraser believes the takeover will create annual synergy effects worth approximately $10m as well as tax benefits to the tune of $28-32m that can be realised within the next three to four years. After deducting the tax benefits, the purchase price is roughly equal to six time Gilman’s annual EBITDA.

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