Boise Cascade Company (BCC) has inked a deal to acquire Coastal Plywood Company, including its two manufacturing locations, from Coastal Forest Resources Company for $512 million.
Based in the U.S., Boise Cascade is one of the largest producers of engineered wood products and plywood, as well as a leading U.S. wholesale distributor of building products.
Terms of the Deal
Based in Florida, U.S., Coastal provides quality plywood, lumber, and treated wood products throughout the eastern U.S.
The addition of Coastal’s well-invested and managed plants at its Havana, Florida, and Chapman, Alabama locations will enhance Boise Cascade’s existing footprint of its integrated facilities in the Southeast.
Furthermore, the acquisition will add approximately 750 talented and dedicated employees.
The acquisition is expected to close in the third quarter of 2022, subject to certain regulatory approvals. The deal is expected to be financed by utilizing existing cash balances.
CEO’s Comments
Commenting on the synergies of the deal, Boise Cascade CEO, Nate Jorgensen, said, “Near term, it provides us the ability to optimize our existing engineered wood products (EWP) asset base.”
He further added, “Longer term, we are excited to fully integrate this strategic venture and we intend to invest $50 million into our Southeast operations over a three-year period to further our EWP production capacity.”
Wall Street’s Take
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on one Buy and two Holds. The average Boise Cascade price target of $80 implies 3.6% upside potential to current levels.
Investors Weigh In
According to the TipRanks’ Stock Investors tool, investors currently have a Very Positive stance on Boise Cascade, with 4.2% of investors increasing their exposure to BCC stock over the past 30 days.
Conclusion
Shares of Boise Cascade have gained over 20% over the past six months, massively beating the rest of the world markets that are struggling to stay afloat.
The newly announced acquisition will enhance the company’s veneer capacity and it existing footprint, boding well for the stock in the long run.
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