Louisiana-Pacific To Acquire Ainsworth Lumber For About $1 Bln. - Update

(RTTNews) - Engineered wood products maker Louisiana-Pacific Corp. (LPX) said Wednesday it has agreed to acquire Canada's Ainsworth Lumber Co. Ltd. (ANS.TO) in a deal valued at about $1.1 billion.

The deal augments Louisiana-Pacific's strength in strand-based wood products, enhances access to international markets, especially in Asia, and broadens its product mix. The deal is to close by the end of the year, subject to customary conditions.

Louisiana-Pacific expects the deal to be accretive to earnings and cash flow in the first year. The deal has a cash and stock component and also includes the assumption of Ainsworth debt less its estimated cash balance.

Louisiana-Pacific will buy all of the outstanding common shares of Ainsworth at C$3.76 a share, based on the closing price of its own shares on Tuesday, September 3. This represents a premium for Ainsworth shareholders of 30 percent relative to the closing price of Ainsworth shares of C$2.89 as of Tuesday.

The deal has the full support of the Ainsworth Board and its largest shareholder group - private equity funds managed by Brookfield Asset Management Inc. (BAM) which has a 54 percent stake in the company.

The consideration of the deal includes about 52 percent cash and 48 percent Louisiana-Pacific common shares.

The Brookfield Funds have agreed to elect to receive 0.114 Louisiana-Pacific common shares and C$1.94 in cash per Ainsworth common share held by them. After the deal closes, the Brookfield Funds will own about 9 percent of Louisiana-Pacific common shares outstanding.

Ainsworth, based in Vancouver, British Columbia, makes oriented strand board (OSB) with a focus on value-added specialty products for markets in North America and Asia.

Ainsworth has four OSB plants spread across Alberta, British Columbia and Ontario, with total annual capacity of 2.5 billion square feet, with the potential to enhance it to 3.1 billion square feet.

Meanwhile, for Nashville, Tennessee-based Louisiana-Pacific, the acquisition will boost its facilities in Canada to seven. On a pro forma basis, the combined company generated about $2.5 billion in sales for the 12 months ended June 2013.

The deal is to be effected by way of a court-approved plan of arrangement and will require the approval of at least 66-2/3 percent of the votes cast by Ainsworth shareholders at a special meeting planned in October.

Shares of Louisiana-Pacific closed Wednesday at $15.26, up $0.06 or 0.39%, on a volume of 1.3 million shares on the New York Stock Exchange. In after hours, the stock dropped $0.01 or 0.07%.

Shares of Ainsworth closed at C$2.94, up C$0.05 or 1.73%, on a volume of 658 thousand shares on the Toronto Stock Exchange.