Nashville, Tenn.-based building materials giant Louisiana-Pacific Corp. agreed to buy Ainsworth Lumber Co. of Canada for about $1.1 billion.
Vancouver, B.C.-based Ainsworth makes oriented strand board (OSB) and specialty products.
“Ainsworth has very high quality assets and provides us with an expanded suite of strand-based products and technologies, additional access to key international growth markets, particularly in Asia, and enhanced scale and efficiencies in North America,” said Curt Stevens, LP’s CEO. “We have great respect for Ainsworth and its people, and we intend to take the best of both companies to create a leading provider of strand-based products that is well positioned to meet the evolving needs of customers in North America and abroad.”
Stevens said the deal is timed to take advantage of the housing market recovery. He pointed to the consensus projection for U.S. housing starts to rise to 957,000 in 2013, an increase of 23%. For 2014, the expectations are for 1.2 million starts.
“We believe the acquisition of Ainsworth provides LP with greater flexibility and exposure to this recovery,” he said.
Ainsworth’s CEO Jim Lake said, “This transaction provides immediate value and liquidity to our shareholders as well as the opportunity to participate in LP’s continued growth as a global leader in strand-based products and technologies.”
LP’s first investment in Canada was in 1978, and it currently employs more than 1,200 people across the country, representing one-third of its total North American workforce.
The proposed transaction, which has a total value of approximately USD$1.1 billion, including the assumption of debt less Ainsworth’s estimated cash balance, represents a premium for Ainsworth shareholders of 30% relative to the closing price of Ainsworth shares of C$2.89 and 24% to the volume weighted average trading price of Ainsworth shares on the TSX over the past 20 trading days as of Sept. 3.