Montreal-based Stella-Jones originally planned to pay US$230 million for the Washington state company, but said Wednesday that it increased the price because of a US$14 million increase in working capital and other purchase price adjustments.
The transaction is expected to close around Nov. 30 and is subject to normal closing conditions. It has already received U.S. antitrust approvals.
The original purchase price included about US$113 million of net working capital and the assumption of certain liabilities.
The transaction will be financed through borrowing and equity.
Stella announced Tuesday an $80-million private placement with a syndicate of underwriters led by RBC Capital Markets and its principal shareholder, Stella Jones International S.A. Net proceeds will be used to partially fund the acquisition.
Founded in 1916, McFarland operate wood treating facilities in Galloway, B.C., Tacoma, Wash., Eugene, Ore., and Electric Mills, Miss.
It is expected to earn US$29 million in pre-tax operating profits (EBITDA) on US$280 million of revenues in 2012, up from US$255 million of revenues for the fiscal year ended Dec. 31, 2011.
In July, Stella-Jones (TSX:SJ) abandoned its plans to acquire Brisco Wood Preservers Ltd., a treated wood pole company based in British Columbia. The company has increased its market share from last year's acquisition of railway tie manufacturer Thompson Industries for US$41 million and the 2010 purchase of Tangent Rail Corp. for US$165 million.
Stella-Jones is a producer and marketer of pressure-treated wood products. It supplies North America's railroad operators with railway ties, timbers and recycling services, and the continent's electrical utilities and telecommunications companies with utility poles.
It also provides industrial products and services for construction and marine applications, as well as residential lumber to retailers and wholesalers for outdoor applications.
On the Toronto Stock Exchange, its shares closed at an all-time high of $73.95, up $2.44 or 3.4 per cent in Wednesday trading.