Information on the Target

Timber-Tech Truss Limited Partnership (“Timber-Tech”) is a prominent provider of engineered truss systems and engineered wood products, based in Calgary, Alberta. With a rich history spanning over four decades, Timber-Tech has established itself as a trusted name in the industry, serving clients throughout Western Canada. The company has significantly expanded its product offerings and capabilities, evidenced by its recent acquisition of Brydon Stairs Ltd. in July 2024, which allowed Timber-Tech to diversify its services and cater to a broader clientele.

Recently, Timber-Tech has further solidified its market position by acquiring Darmac Framing Systems (“Darmac”), a leader in the fabrication of panelized and modular building components for residential construction. Darmac operates from a 40,000 square foot facility in Balzac, Alberta, employing over 50 personnel, and specializes in providing complete framing packages, inclusive of material supply and on-site installation for new construction projects.

Industry Overview in Alberta

The construction industry in Alberta is experiencing robust growth, supported by favorable economic conditions, strong commodity prices, and relatively affordable living costs. The province's economy is projected to continue its upward trajectory, positioning it as a leader in gross domestic product (GDP) among Canadian provinces. Increased interprovincial and international migration is expected to fuel ongoing demand for new housing developments.

As a reflection of this trend, the first quarter of 2025 saw 5,000 new housing starts in Calgary alone, representing a 15% increase compared to the same period in 2024. This surge in construction activity underscores the necessity for advanced building solutions, making Timber-Tech's offerings highly relevant in the current market landscape.

Moreover, the shift towards prefabricated construction solutions aligns with the federal government's mandate and the growing consumer desire for efficiency in building practices. The demand for precision-engineered products, such as prefabricated walls and floor systems, is escalating, as these solutions provide improved quality control and durability.

The Rationale Behind the Deal

The acquisition of Darmac by Timber-Tech is strategically aligned with the company's aggressive growth strategies, which include both organic expansion and strategic acquisitions. This move not only broadens Timber-Tech's product range but also allows the company to provide a complete structural package for new homes. According to Mr. Grant J. Kook, President and CEO of Westcap, the partnership with Timber-Tech has already resulted in substantial growth in top-line revenues and a significant increase in workforce size, highlighting the effectiveness of the investment strategy.

Information about the Investor

Westcap Mgt. Ltd. is a prestigious private equity and venture capital fund manager with over 25 years of experience and more than $1 billion in assets under management. The firm specializes in supporting visionary management teams in their strategies for growth, acquisition, and succession, focusing particularly on opportunities in Western Canada. Westcap prides itself on fostering long-term value creation for its investors through a strong emphasis on integrity and a deep network of strategic partnerships.

View of Dealert

The acquisition of Darmac by Timber-Tech is perceived as a strategic move that enhances the company’s competitive edge within the construction sector. By integrating Darmac's capabilities, Timber-Tech is well-positioned to meet the rising demand for comprehensive building solutions, especially within the growing prefabricated construction market. This approach could lead to improved operational efficiency and profitability, solidifying Timber-Tech's market leadership.

Furthermore, the timing of this acquisition aligns well with Alberta’s booming housing market, where a significant increase in new housing starts presents numerous opportunities. As the construction landscape evolves, Timber-Tech's emphasis on precision-engineered products can cater to the market's changing preferences, positioning them advantageously for future success.

In light of these factors, this investment can be viewed as a prudent move that not only augments Timber-Tech’s market presence but also aligns with broader industry trends towards prefabrication and modular construction. Therefore, we could conclude that this acquisition has the potential to prove fruitful for both Timber-Tech and its investors in the long run.

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