LANGLEY, B.C. – Hardwoods Distribution Inc. (TSX:HWD) has reached an agreement to purchase the assets of Frank Paxton Lumber Co., a U.S.-based lumber provider, for US$13 million.
The distributor of hardwood and lumber products, based in Langley, B.C., said the acquisition of the Frank Paxton is expected to bring in $45 million in new annual sales.
Hardwoods will not acquire any real estate in the transaction, which is to be funded through existing credit facilities. The company said it will be acquiring trade accounts receivable, inventory and equipment.
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The purchase price may be modified depending on the final value of the assets, Hardwoods said. The deal is slated to close on Sept. 19.
Hardwoods chief executive Lance Blanco said the purchase is in line with the company’s efforts to expand its overall market share, particularly in regions where it currently has little presence.
“Paxton’s expertise in architectural millwork provides it with a strong base of customers in commercial and institutional markets, a segment where Hardwoods intends to grow,” Blanco said in a statement.
“We believe the expertise that Hardwoods brings in import products can also offer positive benefits to Paxton’s customer base. In addition, Paxton branches located in Chicago, Cincinnati, and Kansas City represent an attractive entry point into three high-potential markets where Hardwoods does not currently have a significant presence.”
Paxton, a privately-owned company operating since 1914, is a distributor of lumber and hardwood products with operations in five U.S. cities. The company’s additional U.S. centres are in Denver, Colo. and San Antonio, Texas.
Hardwoods shares jumped 23 cents, or nine per cent, to $2.73 per share in late-morning trade on the Toronto Stock Exchange.
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