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Nashville, TN-based manufacturer and distributor of building products, Louisiana-Pacific Corporation (LPX - Snapshot Report), and resource management service provider, Casella Waste Systems Inc. (CWST - Snapshot Report), have recently divested their respective interests in the US GreenFiber, LLC joint-venture to the private equity firm, Tenex Capital Management. The sale, announced on Dec 5, 2013, is valued at $18.0 million.

GreenFiber is primarily engaged in manufacturing natural fiber insulation products required for the construction of residential, home refurbishment and manufactured housing. It was formed in 2012 after a joint-venture deal with Casella Waste Systems and Louisiana-Pacific. GreenFiber boasts a strong presence in the U.S. market for the past 12 years and has achieved the status of one of the largest companies in the insulation industry.

Louisiana-Pacific is highly optimistic about the divestiture. We believe that the company has taken the strategic move to invest the resources in more profitable areas and streamline its business. Excluding working capital, debt and other transaction costs, both Louisiana-Pacific and Casella Waste Systems will receive net cash proceeds of $7 million from the sale.

Louisiana-Pacific is a premier supplier of building materials, delivering innovative, high-quality commodity and specialty products to its retail, wholesale, homebuilding and industrial customers.

The company posted lower-than-expected earnings and revenues during the third quarter of 2013. Lower Oriented strand board (OSB) pricing, a slower recovery in the housing market and higher operating costs seem to be responsible for such disappointing performance. We believe that the overall economic recession will continue to affect the company’s business.

Louisiana-Pacific currently carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the sector are Universal Forest Products Inc. (UFPI - Analyst Report) with a Zacks Rank #1 (Strong Buy) and Boise Cascade Co. (BCC - Snapshot Report) with a Zacks Rank #2 (Buy).

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