) recently terminated its deal with Ainsworth Lumber Co. Ltd.
(ANS), as the necessary regulatory approvals could not be obtained.
The regulatory approvals demanded additional divestitures than
those decided in the previously decided acquisition agreement.
On Sep 4, 2013, Louisiana-Pacific entered into an agreement with
Vancouver-based Ainsworth to acquire all of the outstanding common
shares of the company for about $1.1 billion. The agreement was
expected to be completed by the end of 2013, if all the regulatory
approvals were obtained.
Ainsworth primarily engages in manufacturing and marketing oriented
strand board (OSB) products at facilities throughout North America
and Asia. Ainsworth is one of largest producers of OSB in North
America and has recently achieved the status of being the biggest
supplier of OSB products in Japan.
Had it taken place, the acquisition would have increased the
production capacity of Louisiana-Pacific's OSB segment due to the
addition of Ainsworth's four manufacturing facilities.
Louisiana-Pacific would also have gained access to the high-growth
Asian markets with significant returns.
However, regulatory approvals could not be obtained under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 and the
Canadian Competition Act. As a result, the agreement had to be
terminated, despite being an excellent strategic fit.
Louisiana-Pacific has been reporting losses for the past two
quarters, owing to huge foreign exchange losses and lower pricing
in OSB. However, the company continues to be optimistic about
the increase in residential construction spending and believes that
it will boost its business in the long term.
Louisiana-Pacific carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Investors interested can also consider stocks like
Simpson Manufacturing Co., Inc.
Toll Brothers Inc.
). While Simpson Manufacturing and Toll Brothers sport a Zacks Rank
#1 (Strong Buy), Aegion Corp. carries a Zacks Rank #2 (Buy).
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