Stella-Jones is further expanding its North American network for supplying utility poles and railway ties with the purchase of wood treatment facilities in Oregon, Nevada and Arizona for US$57 million, including US$24 million in working capital.
The acquisition of the Pacific Wood Preserving Companies is expected to close in November and be funded primarily from existing credit facilities and a US$7-million vendor note. The transaction includes a wood concentration yard in Texas but excludes operations in Bakersfield, Calif.
The acquired companies had US$52.4 million of sales in the past fiscal year, about five per cent of Stella-Jones’ projected fiscal 2013 revenues.
Stella-Jones CEO Brian McManus says the acquisition enhances the company’s offerings and expands its ability to supply the North American railway and utility pole industries.
Pierre Lacroix of Desjardins Capital Markets said the transaction should boost Stella-Jones earnings by two to three per cent, adding 10 to 15 cents per share. He says the acquisition will complement the Montreal-based company’s growth from a new tie facility in Georgia and upgrades to its facility in British Columbia.