After more than a year of divesting itself of about $1 billion in noncore assets, Louisiana-Pacific has announced the acquisition of ABT Building Products Corp. for $225 million — $175 million in cash plus the assumption of $50 million in debt.
Portland, Ore.-based Louisiana-Pacific is looking to focus on its core building products businesses and improve its niche in that market, according to company officials.
ABT, which reported $91 million in sales in 1998 and recently was No. 28 among pipe, profile and tubing extruders ranked by Plastics News, produces specialty building products manufactured from engineered wood and plastics, including paneling, moldings, exterior shutters and accessories, door skins and siding.
Gary Ball, ABT's vice president of manufacturing, said the time was right for the consolidation.
``If we had to pick a place where our business would fit in, this would be a marriage from heaven,'' Ball said in a Jan. 19 telephone interview.
The two companies have complementary market dominance.
``They are big in the far West, from Denver [to the Pacific]. We're very strong in the East and the Northeast,'' he said.
Market analyst Jonathan Goldfarb of Merrill Lynch in New York said acquisitions are the trend in the building and construction industry.
As for L-P taking over ABT, ``It's a pretty good strategic fit for the direction Louisiana-Pacific wants to move,'' he said, adding that ``the price paid is a fair one.''
``[ABT's] plastic business has been quite good. ... They have had strong sales, declining costs and have been making a lot of money.''
Philip Zahn, an analyst with Duff & Phelps Credit Rating Co. in Chicago, agrees that the acquisition is ``a good fit. It gives [Louisiana-Pacific] some more diversity and product lines.''
He said that ABT faces several lawsuits regarding its hardboard siding product, but said L-P officials have looked at the lawsuits closely and have determined them to be ``a manageable problem.''
Even with the acquisition, L-P retains it's triple B-plus rating, which is below average but still is considered prudent for investors, Zahn said.
With the exception of moving corporate offices from Neenah, Wis., to Portland, Ball said the sale will not affect most of ABT's employees.
ABT operates plants in Toledo, Ohio; Alpena, Mich.; Roaring River, N.C.; Hopkinsville, Ky.; Holly Springs, Miss.; Middlebury, Ind., as well as two plants in Canada.
ABT recently sold its North Carolina fiber cement plant to CertainTeed Corp.
Last year, L-P sold 300,000 acres of redwood timberlands, a sawmill and manufacturing and distribution operations in California for a total of $615 million. Additionally, L-P sold its Weather-Seal windows and doors division to American Architectural Products Corp. in Youngstown, Ohio; its Creative Point division, which manufactures consumer electronics storage devices, to Mead Corp. of Dayton, Ohio; and its Nature Guard fiber cement roof shake business to Sybex Inc. of Auburn, Wash.