Nashville, TN, November 28, 2006--Louisiana-Pacific Corp. shares on Tuesday leapt as much as 11% as rumors swirled that the cash-rich wood company was an acquisition target.
The ompany's stock was last trading 5.9% higher at $20.79 after climbing as much as $21.75 earlier in the day. More than 4.8 million Louisiana-Pacific shares traded hands, or more than three times their average.
Speculation of a buyout centered on rival Weyerhaeuser or a private equity buyer, said Paul Latta, an analyst at Seattle-area brokerage McAdams Wright Ragen.
"There's a case to be made for either situation or perhaps none of the above," said Latta, who owns some stock in Louisiana-Pacific.
Still, he said a takeover by Weyerhaeuser, a rumor that's circulated for about 15 years, could run into antitrust issues since both companies are such big suppliers of products for home construction, Latta said.
Louisiana-Pacific is the No. 1 North American supplier of oriented strand board, with a 23% share of the market. Weyerhaeuser has a 14% stake.
But Louisiana-Pacific's exposure to new home construction has battered earnings and its stock performance lately. In the third quarter, earnings and sales tumbled from year-ago levels due to the housing market downturn. See full story.
This year, Louisiana-Pacific's stock has fallen about 24%.
But it has a lot of cash on its books and little debt. That may make it attractive to buyers, said analysts.
Earlier this month, Dallas-based fund manager Highland Capital Management, which sometimes takes an activist and litigious role in its investments, disclosed that it owned 6.43 million shares, or about a 6% stake in Louisiana Pacific.
