Mercer (MERC) Receives Court Approval to Acquire Structurlam
Mercer International MERC announced that it has received bankruptcy court approval for the acquisition of Structurlam Mass Timber Corporation and its subsidiaries for $81 million. This deal, which is expected to close soon (subject to satisfaction of customary conditions), 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.
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.
The assets include a state-of-the-art mass timber facility in Conway, AR with has an annual capacity of approximately 75,000 cubic meters. It can produce both (glulam and cross-laminated timber (CLT). The acquisition also includes three facilities located in British Columbia, Canada with a combined annual capacity of approximately 40,000 cubic meters of glulam and CLT.
Benefits for Mercer
The acquisition will boost Mercer's CLT capacity by approximately 210,000 cubic meters and add 45,000 cubic meters of glulam production capacity. It is used as a primary material for load-bearing structures such as columns, beams, floor joists and trusses. Glulam has gained preference compared to other construction materials such as steel and concrete owing to its high strength-to-weight ratio, increased efficiencies in logistics and smaller carbon footprint.
The acquisition of these assets is in sync 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 38.2% over the past year, compared with the industry's decline of 32.9%.
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Zacks Rank & Stocks to Consider
MERC currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Gold Fields Limited GFI, AngloGold Ashanti AU and Alamos Gold Inc. AGI. GFI currently sports a Zacks Rank #1 (Strong Buy), while AU and AGI carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks 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. Its shares have gained 52% in the past year.
The consensus estimate for AngloGold Ashanti’s earnings per share is pegged at $1.94 for 2023. Earnings estimates have been revised 22% upward in the past 60 days. The company has gained 36% in a year.
The consensus mark for Alamos Gold’s earnings per share is pegged at 47 cents for 2023. Earnings estimates have been revised 14.6% upward in the past 60 days. AGI has gained 56% in a year.
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AngloGold Ashanti Limited (AU) : Free Stock Analysis Report
Gold Fields Limited (GFI) : Free Stock Analysis Report
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Mercer International Inc. (MERC) : Free Stock Analysis Report
