Louisiana-Pacific Corp. (LPX) terminated its C$951 million ($873 million) takeover of Ainsworth Lumber Co., a Canadian producer of a plywood substitute, after regulators said further asset sales were necessary.
“We fundamentally disagree with the analysis by antitrust agencies,” Nashville, Tennessee-based Louisiana-Pacific’s Chief Executive Officer Curt Stevens said today in a statement released by both companies. “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.”
The acquisition of Vancouver-based Ainsworth, announced Sept. 4, would have increased Louisiana-Pacific’s exposure to a recovery in U.S. house-building and given it more access to Asian markets. The companies said last week that Canadian and U.S. regulators blocked the proposed deal on antitrust concerns pending the sale of additional assets.
The transaction would probably have resulted in “a substantial lessening of competition” for the supply of oriented strand board, Canada’s Competition Bureau said in a statement today. Louisiana-Pacific’s acquisition may have harmed customers in the Pacific Northwest and Upper Midwest, the U.S. Department of Justice said in a separate statement. The two regulators said they worked closely together on their respective reviews.
As both companies agreed to terminate the deal, no break fee will be paid.
Louisiana-Pacific’s financial advisers on the deal were BMO Capital Markets and Goldman Sachs Group Inc. and its legal advisers were Jones Day LP, Stikeman Elliott LLP and Orrick Herrington & Sutcliffe LLP, according to the September statement announcing the deal. Ainsworth’s financial adviser was RBC Capital Markets and its legal advisers were Goodmans LLP and Skadden Arps Slate Meagher & Flom LLP.
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