Mercer (MERC) Boosts Production Capacity With Structurlam Buy
Mercer International MERC announced that it has completed the previously announced acquisition of Structurlam Mass Timber Corporation and its subsidiaries for $81 million. This move will fortify MERC’s position as a leading mass timber provider in North America. The addition of glued laminated timber (glulam) capability will expand its product offering and enable it to serve its growing customer base.
The Structurlam assets include a state-of-the-art mass timber facility in Conway, AR which has an annual capacity of approximately 75,000 cubic meters. It can produce both glulam and cross-laminated timber (CLT). The deal also includes three facilities located in British Columbia, Canada with a combined annual capacity of approximately 40,000 cubic meters of glulam and CLT.
Structurlam had entered into a stalking horse asset purchase agreement with Mercer in April 2023. Structurlam subsequently filed for bankruptcy under Chapter 11 of the U.S. code. Last month, MERC received bankruptcy court approval for the acquisition.
Augments Production Capacity
The acquisition will boost Mercer's CLT capacity by approximately 210,000 cubic meters and add 45,000 cubic meters of glulam production capacity. Glulam is used as a primary material for load-bearing structures such as columns, beams, floor joists and trusses. It has gained preference compared to other construction materials such as steel and concrete due to its high strength-to-weight ratio, increased efficiencies in logistics and smaller carbon footprint.
Gaining Share in CLT & Glulam Markets
The acquisition of Structurlam’s assets fits well with MERC’s strategy to expand and diversify its product mix in solid wood operations while building its existing mass timber business. It will also complement the company’s existing Mercer Mass Timber facility in Spokane Valley, WA and is further expected to lead to significant synergies on a combined basis. Both these facilities, being two of the most modern mass timber facilities in North America, will aid Mercer in capitalizing on the growing market share of CLT and glulam in the North American construction business. It also adds to the company’s efforts to bring sustainable and carbon-reducing products to the market.
Price Performance
Shares of Mercer International have fallen 32.2% over the past year, compared with the industry's 16.2% decline.
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Zacks Rank & Stocks to Consider
MERC currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are Piedmont Lithium Inc. PLL, Gold Fields Limited GFI and Franco-Nevada Corporation FNV. PLL and GFI currently sport a Zacks Rank #1 (Strong Buy) while FNV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Piedmont Lithium’s earnings per share is pegged at $6.29 for 2023. Earnings estimates have been revised 62.9% upward in the past 60 days. PLL has gained 22.5% in a year.
The consensus estimate for Gold Fields’ fiscal 2023 earnings per share is pegged at $1.01. Earnings estimates have moved 6.3% north in the past 60 days. GFI’s shares have gained 65.7% in the past year.
The consensus estimate for Franco-Nevada’s fiscal 2023 earnings per share is pegged at $3.51. Earnings estimates have moved 9.3% north in the past 60 days. FNV has a trailing four-quarter earnings surprise of 2.8%, on average. Its shares have gained 3.6% in the past year.
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Piedmont Lithium Inc. (PLL) : Free Stock Analysis Report
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Mercer International Inc. (MERC) : Free Stock Analysis Report
