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Stella-Jones to buy Ontario wood treatment company Ram Forest; shares surge

MONTREAL – Stella-Jones is expanding its wood treating capabilities for the residential lumber market, saying it has signed a letter of intent to purchase Ontario supplier Ram Forest Group and Ramfor Lumber for an undisclosed price.

Ram Forest subsidiaries operate treating facilities in Gormley and Peterborough that generated about $90 million in sales last year.

A wood milling plant operated by the company in Uxbridge is not part of the transaction.

The deal announced Wednesday is expected to close in October 2015.

Shares of Montreal-based Stella-Jones (TSX:SJ) hit an all-time high of $44.27 after the company announced strong first-quarter results.

On the Toronto Stock Exchange, the shares gained $2.41 or 5.84 per cent to $43.70 in late-day trading Wednesday.

Stella-Jones revenues and profit surged more than 30 per cent in the quarter. It earned $30.1 million or 43 cents per diluted share, up from $22.5 million or 33 cents per share in the prior year.

Revenues increased to $340.7 million from $257.5 million on acquisitions, favourable currency translation and organic growth due to higher selling prices.

Chief executive Brian McManus said he expects demand for its core products to remain solid in 2015 on continued momentum in the North American economy.

Sara O’Brien of RBC Capital Markets raised her target price to $47 from $42 on expectations of more acquisitions to come and an eventual higher dividend payout.

Stella-Jones supplies pressure-treated ties and timbers to North American railways, utility poles to electrical utilities and telecom companies and lumber for residential customers.