Ainsworth Says Regulators Demand More DivestmentsChristopher Donville
Louisiana-Pacific Corp.’s announced C$951 million ($879 million) takeover of Ainsworth Lumber Co., a producer of a plywood substitute, was blocked by Canadian and U.S. regulators on antitrust concerns pending the sale of additional assets.
It may be necessary to sell parts of either company before the deal can be completed, Vancouver-based Ainsworth said today in a statement. The companies are considering “possible solutions and alternatives,” it said.
Buying the Canadian company would boost Nashville, Tennessee-based Louisiana-Pacific’s exposure to a recovery in U.S. house building and give it greater access to Asian markets. Louisiana-Pacific is the largest North American producer of oriented strand board, with a market share of about 24 percent, according to a Feb. 27 regulatory filing.
Ainsworth said today the two companies have been in regular contact with the U.S. Department of Justice and the Canadian Competition Bureau regarding the antitrust and competition matters.
Louisiana-Pacific Chief Executive Officer Curtis Stevens said today that “we may have to litigate with the regulators” to keep the current deal intact.
“LP and Ainsworth continue to explore other options with the regulators that could involve divestitures that go beyond what was contemplated,” Stevens said on a conference call. “This of course would require changes to the arrangement agreement that would need approval from both boards and the Ainsworth shareholders.”
Gina Talamona, a Washington-based spokeswoman for the Department of Justice, confirmed that its review of the proposed deal is in progress, but declined to give details. Melanie Beauchesne, a spokeswoman for the Competition Bureau in Ottawa, also declined to comment on the specifics of its review.
Ainsworth, which makes oriented strand board at four locations in Alberta, British Columbia and Ontario, fell 6.1 percent to C$3.36 at the close in Toronto.
Louisiana-Pacific dropped 3 percent to $15.43 in New York. The shares have declined 17 percent this year.