The acquisition complements its core business, Drax said, as it moves ahead with ongoing plans to convert its once entirely coal-fired power plant to a largely biomass-fuelled generator.
Drax chief executive Dorothy Thompson said the move would also enable the company to move into the UK heat market.
“Biomass is a cost-effective, low carbon and dependable source of heat which homes and businesses can rely on,” Thompson said.
Drax said it expects the wood pellet market to grow from the current levels of around 200,000 tonnes to more than 1 million tonnes per annum by 2020.
The company declined to give the value of the deal, but it is understood to be in the single digit millions.