Hixson Lumber Sales, which includes the company’s plant on Arkansas 19 south of Magnolia, was sold to Doman Building Materials Group Ltd. of Vancouver, British Columbia, Canada.
Doman said it acquired all of the assets of Texas-based Hixson for about $375 million in cash, including inventory.
Hixson is being acquired on a cash-free and debt-free basis, and the transaction is being financed with the company’s existing cash and revolving credit facilities.
Hixson is a lumber and treated lumber wholesale and manufacturing company operating in the central United States. Doman said in a statement that its operations are highly complementary to the company’s existing operations on the US West Coast, with no overlap.
Doman said the transaction will facilitate business growth, be immediately accretive, and expand the company’s product line to include new offerings.
“We are delighted with the addition of Hixson to the Doman group of companies. The transaction is a great complement to our existing US operations while advancing our growth strategy and developing a leadership position in the US Central Corridor, in regions such as Texas that continue to have extremely strong growth,” said Amar Doman, Chairman of the Board. and CEO.
“We continue our disciplined approach to tracking and executing accretive growth opportunities, further strengthening our financial performance and enhancing shareholder value based on a fundamentally strong and sustainable growth plan. With the transaction, our footprint in the United States now extends from the West Coast and Hawaii across the continent and in several high growth states in the middle of the United States, we proudly operate 32 processing plants across our system, and our product offerings include mostly southern yellow pine building materials.”
Hixson was founded in 1959 and is headquartered in Dallas. It has approximately 1,100 employees. Hixson is a value-added wholesale and manufacturing company in lumber and treated lumber, operating from 19 locations in eight US states. Hixson operates 19 wood treating plants, five specialty sawmills and its own fleet of trucks, and services and delivers products to approximately 25 states, primarily in the central United States.
In addition to its Magnolia plant, Hixson’s other Arkansas facilities are in Rison, Pine Bluff, Plumerville and Russellville.
Other locations are in Caddo Mills, Carrolton, Gilmer and Willis, TX, Winnfield, LA, Hattiesburg, MS, and Hillsboro and Streator, IL.
With approximately 1,100 employees, Hixson serves national big-box retailers, several national homebuilder distribution fleets, large regional lumberyards, and several small independent lumberyards. Key business segments include pressure treated lumber, wood fencing manufacturing and specialty items for the new home and renovation markets.
The transaction will combine Hixson’s operations with Doman’s well-established and growing North American platform, which includes the California Cascade and Honsador groups of companies.
Doman says the deal immediately secures a market-leading position in the region with a diverse and loyal customer base from its locations in Texas, Arkansas, Illinois, Indiana, Missouri, Mississippi, Louisiana and Illinois. Tennessee.
Doman will also claim a position as one of the largest producers of pressure-treated lumber in North America with an annual capacity of approximately 2 billion board feet, adding to the existing base of pressure-treated mills and of the company’s distribution centers.
The acquisition of Hixson effectively triples Doman’s sales in the United States, and the purchase price is in line with the company’s traditional multiple target range for acquisitions.
In assessing the financial merits of the transaction, Doman’s management felt it was prudent to assess the Hixson transaction from a long-term perspective, despite exceptionally strong performance and record results for both companies in 2020. continued through the first quarter of 2021. As such, management felt it was vitally important to consider Hixson’s financial performance at an appropriate discount to recent overall outperformance. of the industry, which is driven by market supply and pricing dynamics in the North American building materials space.
“This has led our team and financial advisors to arrive at a more normalized picture of Hixson’s performance. On this normalized basis, the transaction is expected to be more than 55% accretive to both earnings per share and free cash flow per share.
Doman expects to realize synergies by integrating Hixson’s business with the company’s existing customer base and product suite. Opportunities for additional operational and margin synergies are expected to materialize over time, including scale and purchasing advantages on pressure treated inputs, and the use of buying, selling and distribution channels company facilities and access to company infrastructure and resources.
Doman’s statement called Hixson “an exceptionally managed family business that has a strong heritage in its key markets and strong relationships with its customers and suppliers.” Hixson has a committed and strong management team that operates very effectively on its platform in the central United States. Key executives have over 50 years of combined industry experience and will remain in place, further strengthening the company’s workforce. »
The transaction closed on June 4, 2021 and is not subject to any further regulatory or shareholder approval or consent.
Doman is headquartered in Vancouver and trades on the Toronto Stock Exchange under the symbol DBM and is a leading North American distributor of building materials. It is Canada’s only fully integrated national distributor of building materials and related products.
Doman operates several distinct divisions: CanWel Building Materials with multiple processing plants, planing facilities and distribution centers coast to coast in all major cities and strategic locations across Canada.