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Last week, Tembec sold some non-core assets to a private company for C$13 million and said it planned to focus on its core business of production of wood, pulp, papers, paperboard and chemicals products.
Canfor will buy Tembec's Elko and Canal Flats sawmills, and the deal will include a long-term agreement to provide residual fiber for Tembec's northern bleached softwood kraft pulp mill in Skookumchuck, British Columbia.
The deal is expected to close by the first quarter of 2012, the companies said.
($1 = 1.0313 Canadian dollars)
Reporting by Gowri Jayakumar in Bangalore; Editing by Maju Samuel