), the leading manufacturer of homebuilding products, recently
completed the acquisition of Canfor Corporation's 50% share in
the Peace Valley Oriented Strand Board (OSB) mill, which both the
companies jointly owned. Louisiana paid about $77 million for
Canfor's share and has now become the sole owner of Peace Valley.
Canfor may receive further payment over a three-year period based
on Peace Valley OSB's trailing 12-month earnings, before,
interest, taxes, depreciation and amortization (EBITDA).
The Peace Valley mill is located in Fort St. John, British
Columbia. As part of their joint ownership, Canfor provided
labor, raw materials and administrative services and Louisiana
gave operational support. The facility can manufacture up to 820
million square feet of OSB. The OSB products are sold under the
LP brand name. Following the acquisition, Canfor will continue to
provide raw materials to Peace Valley.
The Peace Valley acquisition will strengthen Louisiana's OSB
segment, which manufactures and distributes OSB structural panel
products. It will increase the production capacity of the
segment, thus improving its ability to benefit from the improving
demand for OSB products driven by improving housing market.
Sales in the segment grew 92.6% to $287 million in the first
quarter of 2013 owing to an increase in pricing. The improved
housing start driven by growing momentum of the housing market
recovery, led to increase in volume in the segment.
Louisiana-Pacific is optimistic about the housing market
recovery and believes that the company is well prepared to meet
the additional demand.
Louisiana-Pacific carries a Zacks Rank #2 (Buy).
Some other companies that are doing well and deserve a mention
Universal Forest Products Inc.
). Potlatch Corporation carries a Zacks Rank #1 (Strong Buy)
whereas Weyerhaeuser and Universal Forest Products carry a Zacks
Rank #2 (Buy).
LOUISIANA PAC (LPX): Free Stock Analysis
POTLATCH CORP (PCH): Free Stock Analysis
UNIVL FST PRODS (UFPI): Free Stock Analysis
WEYERHAEUSER CO (WY): Free Stock Analysis
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