) jumped around 11% on an announcement of its definitive
agreement to buy Vancouver-based Ainsworth Lumber Co. Ltd. for
$1.1 billion, including debt. Based in Nashville, TN,
Louisiana-Pacific is engaged in the manufacture and distribution
of oriental strand (OSB) board, engineered wood products, siding,
decking, molding and wall coverings at facilities throughout the
U.S. and Canada.
Ainsworth is primarily engages in manufacturing and marketing
oriented strand board (OSB) products at facilities throughout
North America and Asia. Ainsworth is one of largest producer of
OSB in North America. Additionally, Ainsworth boasts a strong
presence in the Asian market and has recently achieved the status
of the biggest supplier of OSB products in Japan.
Over all, the acquisition will increase the production
capacity of the company's OSB segment due to the addition of
Ainsworth's four manufacturing facilities. The Zacks Rank #3
(Hold) company will also gain access into high-growth Asian
markets with significant returns.
The acquisition will also allow Louisiana-Pacific to offer
diversified OSB products in the industry and also improve its
ability to benefit from the high demand for OSB products driven
by improving housing market. The transaction is expected to be
accretive to the Louisiana-Pacific's earnings in the first year
Brookfield Asset Management Inc.
), an asset management holding firm, holds 54% stake in Ainsworth
through private equity funds. Following the acquisition,
Brookfield will have 9% equity interest in Louisiana-Pacific. The
company expects to complete the takeover by the end of 2013,
subject to customary regulations.
The purchase of $1.1 billion (or Canadian dollar 3.76 per
share or $3.58 per share) includes debt and excludes Ainsworth's
cash balance. Louisiana-Pacific will pay 52% of the amount in
cash and the remaining 48% in the form of its common shares.
Ainsworth's board of directors have unanimously approved the
merger while and Brookfield's private equity funds have agreed to
vote in favor of it.
We believe that the transaction is an excellent strategic fit
for Louisiana-Pacific as it will strengthen its presence in the
North American OSB segment where Ainsworth primarily
Some other companies that are doing well and deserve a mention
Boise Cascade Co.
). While Boise Cascade has a Zacks Rank #1 (Strong Buy), Rayonier
carries a Zacks Rank #2 (Buy).
BROOKFIELD ASST (BAM): Free Stock Analysis
BOISE CASCADE (BCC): Free Stock Analysis
LOUISIANA PAC (LPX): Free Stock Analysis
RAYONIER INC (RYN): Free Stock Analysis
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