Louisiana-Pacific executives and their counterparts at Ainsworth Lumber have called off a $1.1 billion deal to have the Nashville-based company buy its Canadian rival.
News of the abandonment comes less than a week after the companies said U.S. and Canadian regulators had told them the purchase agreement would not meet with approval without major divestitures. At the time, LP CEO Curt Stevens said the companies were considering pushing ahead, which likely would result in regulators filing suit against them.
On Wednesday, LP and Ainsworth said approval was not going to happen "without divestitures significantly beyond those contemplated in the Arrangement Agreement [and] without engaging in lengthy and expensive litigation with the regulatory authorities in the US and Canada."
Shares of LP (Ticker: LPX) slipped more than 2 percent in the hour before the news was announced but regained that ground soon after. At about 12:45 p.m., they were down 0.8 percent at $15.74. They're down 16 percent year to date and up about 4 percent since Stevens announced the Ainsworth deal in early September.
"We believe this transaction would have led to positive outcomes for customers, employees and shareholders, and fundamentally disagree with the analysis by antitrust agencies of the competitive dynamics of our industry," Stevens said. "Our business experience, supported by expert economic analysis, continues to be that North America is an integrated market for structural panels. We will continue to compete on a continent-wide basis but feel 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."
Because both LP and Ainsworth have agreed to end their agreement, neither is on the hook for a termination fee.
"Although we are disappointed with this outcome, we look forward to advancing the ongoing growth and success of our business," said Jim Lake, Ainsworth's CEO. "Our strong competitive positioning, combined with our additional low cost capacity and strong balance sheet profile will allow us to capitalize on the expected recovery in the U.S. housing market and continued growth in our export markets."
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