Construction material supplier, Louisiana-Pacific Corporation (NYSE: LPX
) announced on Wednesday that it has agreed to acquire Ainsworth Lumber Co. in deal valued at about $1.1 billion. The deal will allow LPX to gain foothold in Asia and reap benefits from significantly improving U.S. housing market.
The proposed acquisition agreement values Ainsworth at $3.76 C$ a share (US$ 3.59), representing a premium of 30% over closing stock price on Tuesday.
The deal also includes assumption of Ainsworth’s debt. Meanwhile, Brookfield Asset Management Inc; which owns 54% stake in Ainsworth, also voted in favor of the deal.
LPX expects the acquisition to boost its cash flow and earnings from the first year itself.
However, the transaction requires approval of at least two-thirds of Ainsworth shareholders. The Company will hold a special meeting for voting over this issue in October. The deal does not require an approval from LPX shareholders; however, regulatory approval is needed.
The deal is expected to close by the end of the year. The Company intends to finance the cash transaction through a combination of existing cash balances in both the balance sheets and remaining by new credit sources.
Commenting over the deal, LPX’s CEO, Curt Stevens said, “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.”