Louisiana-Pacific (LPX) Completes Barrier Technology Buyout

Louisiana-Pacific Corporation (NYSE:LPX) , a preeminent company in the field of high performing building solutions, finalized its acquisition of International Barrier Technology Inc., a company known for manufacturing fire retardant coating used in engineered wood products.

On Oct 13, 2017, shares of Louisiana-Pacific gained 0.1% to end at $28.32.

Deal Details

Louisiana-Pacific had planned the purchase of Barrier Technology in July 2017. The agreement finally closed for $22 million, making Barrier Technology a wholly own subsidiary of Louisiana-Pacific.

Notably, the buyout will not dishonor Barrier Technology’s current contracts and its service to customers.

Will the Buyout Help Louisiana-Pacific?

Louisiana-Pacific has been focused on driving its top line by providing quality engineered wood building products that ensure maximum consumer satisfaction. To improve the quality of its engineered wood building products, Louisiana-Pacific saw immense potential in Barrier Technology’s branded product — LP FlameBlock Fire-Rated OSB Sheathing and Blazeguard FR Deck Panel. This particular product is used to make engineered wood fire resistant. In fact, Louisiana-Pacific had already licensed and adopted Barrier Technology’s FlameBlock products at its Clarke County Alabama mill.

In the view of increasing demand for fire resistance products in residential and commercial buildings, the Barrier Technology buyout is expected to prove beneficial for the company.

Notably, Barrier Technology will operate as part of Louisiana-Pacific’s Oriented Strand Board or OSB business. The OSB segment, constituting 58% of Louisiana-Pacific’s total revenue, is focused on diversification of specialty products. In fact, OSB recorded the best earnings performance in the last quarter after 2006.

Moreover, in the last reported quarter, sales at the OSB segment increased 28.6% year over year to $325 million. However, sales volume remained flat year over year, while sales prices increased 26%.

In order to drive sales volume in the segment, the company is taking various initiatives to strengthen its product pipeline. In fact, the Barrier Technology acquisition is likely to drive sales at the OSB segment. As per the company, this acquisition will ensure long-term support to Louisiana-Pacific in terms of investments in FlameBlock market development and product sales.

Share Price Movement

Shares of Louisiana-Pacific have outperformed its industry year to date. The stock has gained 49.6% compared with the industry’s gain of 20.6%.



The company has witnessed a northward movement in current quarter and year earnings estimate revisions. Earnings estimates have moved up 18.8% for the current quarter and 12.2% for the year over the past 60 days, reflecting analysts’ optimism on the stock.

Further, acquisition of Barrier Technology will help the company in its relentless efforts to improve the quality of its products. The company expects to grow in the remaining of the year on the back of sustainable improvement projects including consistent siding growth and instigation of new specialty products.

Zacks Rank and Key Picks

Louisiana-Pacific currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the industry include Rayonier Inc. (NYSE:RYN) , Potlatch Corporation (NASDAQ:PCH) and Weyerhaeuser Co. (NYSE:WY) . While Rayonier flaunts a Zacks Rank #1 (Strong Buy), Potlatch Corporation and Weyerhaeuser carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rayonier’s next-year earnings are projected to grow 8.8%.

Current-year earnings for Potlatch Corporation are estimated to increase 107.1%.

Weyerhaeuser’s current-year earnings are estimated to increase 39.6%.

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