Vancouver, BC, August 26--Ainsworth Lumber Co. has agreed to pay $457.5 million US to buy three wood-panel manufacturing plants and a related power plant in Minnesota from Potlatch Corp., the latest acquisition for the growing Vancouver-based company.
The acquisitions will increase Ainsworth's capacity for producing oriented strand board, a plywood substitute used in house construction, by about 65 per cent over current levels.
Potlatch produces over 1.3 billion square feet of OSB annually at three plants in the northern Minnesota communities of Bemidji, Cook and Grand Rapids. The acquisition, once completed, will boost Ainsworth's annual OSB output to 3.3 billion square feet annually.
"This acquisition will significantly enhance our geographic balance, flexibility and product diversity," Brian Ainsworth, the company's chairman and chief executive officer, said in a statement.
"The proximity of the Potlatch mills to each other and to our facility in Barwick, Ont., will enable us to access new markets, optimize our overall efficiency and provide excellent service and flexibility to our customers."
He added that, like the $193 million US purchase of Voyageur Panel Ltd. in Barwick in April, the Potlatch acquisition is a less costly alternative to building new manufacturing capacity and allows the company be benefit from current strong prices for the building product.
Ainsworth said the acquisition will be funded with cash on hand and new senior unsecured debt. The transaction is expected to close in September, subject to receipt of governmental approvals and closing conditions.
Potlatch Corp. is a diversified forest products company based in Spokane, Wash. Their manufacturing facilities produce lumber, panels, pulp, paperboard and tissue.
Ainsworth has operated as a forest products company in Western Canada for over 50 years. In addition to making oriented strand board, it manufactures specialty overlaid plywood.
Its current OSB operations include a plant at Grande Prairie, Alta., a one-half interest in the Footner OSB plant at High Level, Alta., and a plant at 100 Mile House, B.C., in addition to the Voyageur plant in Barwick, Ont, about 440 kilometres north of Minneapolis.
