A newly formed subsidiary of Wayne, N.J.-based Building Materials Corp. of America has agreed to purchase Biddeford, Maine-based composite lumber maker Correct Building Products LLC for an undisclosed sum.
The deal is expected to close in a little more than a month.
Officials from both companies characterized the deal as a logical one for financial, technological and distribution reasons.
BMCA, which operates as GAF Materials Corp., can help Correct achieve broader distribution, and Correct will give GAF's decking business a broader range of wood-plastic composite extrusion technologies to accompany its CrossTimbers-brand deck and railing products.
I think it's a good situation. It's a pretty synergistic arrangement, said Correct co-founder Marty Grohman in a July 16 telephone interview.
Both companies use polypropylene as the polymer base for their extruded products, whereas the vast majority of wood-plastic composite lumber makers employ polyethylene.
PP creates a stiffer board than can be achieved with PE.
The plastics lumber industry has taken a hit throughout the recession: It has contracted, but the dynamics have not changed all that much, Grohman said.
The market actually isn't really changing. It just got smaller. It's like it just became 1999 all over again. It's the new reality.
I guess it's nice in its predictability predictably bad, he said, laughing.
Grohman, and GAF officials are confident in the industry's future.
We think that there's still a long-term share gains story with this category, said Tony Ruffine, BMCA's executive director of business development, in a July 17 telephone interview.
As the products continue to improve and people become more comfortable with them, we're going to see them in more applications.
There's going to be a shakeout and companies without a sustainable business model may not be there, he said.
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