NASHVILLE, TN/VANCOUVER, BC - The $1.1 billion deal between Louisiana-Pacific Corp. and Ainsworth Lumber Co. was called off May 14 as the two structural panel firms determined they could not get federal regulatory approval without significant divestitures.
Objections were raised by the U.S. Department of Justice (DOJ) and Canadian Competition Bureau (CCB) regarding antitrust and competition matters. A supplier of building products, LP also produces oriented strand board (OSB) panels; LP has mills in the United States and Western Canada, while Ainsworth operates four OSB mills in Canada.
John Pecman, CCB's Commisioner of Competition, stated, "Our review concluded that LP's acquisition of Ainsworth would have likely resulted in serious competition concerns for the supply of OSB; purchasers would have faced higher prices and less choice."
Denying that claim, LP CEO Curt Stevens said, "We believe this transaction would have led to positive outcomes for customers, employees and shareholders, and fundamentally disagree with the analysis by antitrust agencies of the competitive dynamics of our industry.
"Our business experience, supported by expert economic analysis, continues to be that North America is an integrated market for structural panels. We will continue to compete on a continent-wide basis but feel we have no choice but to terminate the agreement rather than accept the distraction, disruption, costs and risk of litigating this matter in both the U.S. and Canada, where the process could take upwards of a year,” Stevens added.
Ainsworth CEO Jim Lake agreed, adding, “Although we are disappointed with this outcome, we look forward to advancing the ongoing growth and success of our business. Our strong competitive positioning, combined with our additional low cost capacity and strong balance sheet profile will allow us to capitalize on the expected recovery in the U.S. housing market and continued growth in our export markets.”
Completion of the Sept. 4, 2013 agreement between Nashville-based Louisiana-Pacific (NYSE:LPX) and Vancouver-based Ainsworth (TSE:ANS) for $1.1 billion including debt, was originally set to close April 18. The acquisition of Ainsworth's four OSB manufacturing plants would have expanded LP's engineered wood building materials' reach in the North American housing market by a combined annual capacity of 2.5 billion square feet (3/8-inch basis).
Founded in 1973, LP produces engineered wood building materials including OSB, structural framing products and exterior siding. Ainsworth was founded in 1952.
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