Vancouver-based CanWel Building Materials Group Ltd. has signed a letter of intent to purchase Northwest Wood Preservers from the BID Group of Companies.
"We have examined many strategies to build vertical integration capabilities where it makes operational and economic sense for CanWel," CanWel chief executive officer Amar Doman said in a press release issued Wednesday morning.
"The acquisition will provide us with an integrated capability in treated lumber that is expected to enhance our profitability and growth strategies, as CanWel is currently a customer of the plant.
"By vertically integrating these operations, CanWel reinforces its position within the pressure treated arena and in the Western Canadian space.
"This transaction is not only a strategic move, but is also expected to be accretive annually for the company."
BID Group communications manager Carla Johnston said the deal works for both companies with respect to their core businesses.
"On the BID side, our core business is industrial construction and fabrication, that's what we're good at, that's what we've been doing for 30 years," Johnston said. "And on the CanWel side, they are in the business of national distribution of building materials. That includes lumber and judging by this deal, it's vertical integration that they're interested in doing."
Located in the BCR Industrial site, Northwest Wood Preservers supplies chemically treated wood products and employs about 50 people, according to the firm's website.
Johnson doubts their jobs will be affected.
"The future opportunities for both groups in both markets, both in Western Canada and nationally, are tremendous," Johnston said. "What's important to remember is the existing talent and manpower is critical to that success so without question the deal would only strengthen job opportunities of both organizations."
It began in 1978 as Prince George Wood Preservers, a small chromated copper arsenate facility used to treat wood for below-ground uses such as preserved wood foundations for houses, posts and poles, and heavy industrial timbers and ties.
In the 1980s, a sawmill and planer were added to the operation.
The name was changed to Northwest Wood Preservers in 2003 when the BID Group purchased the site. In 2004, the company expanded by adding alkaline copper quaternary treating, used for all-weather wood products such as fences, decks, playgrounds, and landscaping structures.
Operating through CanWelBroadLeaf and Surewood Forest Products, CanWel supplies building materials to "big box" retailers, lumber yards and hardware stores.
The letter of intent is non-binding and subject to conditions. The aim is to close the deal in the fourth quarter of 2011.
A selling price and the conditions of sale were not specified, although CanWel said the purchase will be "satisfied fully in cash from existing credit facilities."
With the purchase, CanWel will own four treatment plants.
