In June of this year, Australia’s timber supply crisis took the real and reel world by storm, with people on TikTok turning the situation into a short, shocking documentary. After all, currently, construction workers are in disarray, struggling to find timber to build houses. Keeping its eyes on the prize, materials supplier and distributor Big River (ASX: BRI) has acquired Epping Timber Joinery & Hardware and its Prefab subsidiary (Epping Timber) for $6 million. 

Epping Timber is located in Epping and Beaufort, giving Big River enhanced access to the growing northern suburbs of Melbourne and the thriving Ballarat area of regional Victoria. Epping Timber’s two sites fit within the Building Trade Centre category of the Big River strategy, supplying a broad product range predominantly into the residential construction markets. The acquisition is set to complete in early December 2022. 

Big River CEO, Jim Bindon, commented, “The Epping Timber acquisition ensures the longevity of the Chincarini family legacy built over their 57 years in business. Big River looks forward to bringing our national product range, supplier relationships and capabilities to further enhance the customer offering, and we look forward to continuing the long-term partnership that customers, suppliers and the staff have enjoyed with Epping Timber.”

Big River supplies and distributes building materials, ranging from plywood and flooring to wall panels, timber and more. Its presence is felt across industries, be they commercial or residential. The recent housing shortages and increasing rents have made timber acquisitions a lucrative proposition for the Company, especially in the residential segment.

The pandemic, Russian sanctions and intensifying global competition for construction materials have led to Aussies witnessing an extreme timber shortage this year, sending timber prices through the roof. This has, in turn, resulted in delays in building houses, which has shot up rents. Even though there is a growing demand for new homes, there is little way to satisfy them. That’s what Big River is attempting to address. 

The agreement is valued at $6 million, including a cash component at completion with additional earn-out payments over a two-year period if certain profit growth targets are achieved. The acquisition is expected to be earnings per share accretive from year one and will be funded from the Company’s existing debt facilities. 

It will expand the Big River network across Australia and even add to its capacity and reach in Victoria. With annual revenue exceeding $16 million, Epping Timber is complementary to the Company’s existing Victorian sites at Geelong, Dandenong, Dandenong South and Campbellfield. While Big River has a strong Melbourne presence in the Formwork & Commercial and Panels markets, Epping Timber also provides an excellent Building Trade Centre and Frame & Truss capacity, thus improving its overall suite of product offerings into the residential construction markets. 

Epping Timber is a 57-year-old business boasting impressive trade, a loyal customer base and strong supplier relationships. The addition of the Frame & Truss capability through the Beaufort site adds to Big River’s three existing pre-fabrication sites in southern Australia, thus increasing its total manufacturing capacity. 

With few companies satisfying the growing timber demand, it is an advantageous time for material suppliers to team up with them. Money might not grow on trees, but, evidently, money sure can find its path through them.