Flakeboard Drops Acquisition Bid

Flakeboard America Ltd. abandoned its plan to acquire one medium-density fiberboard (MDF) and two particleboard mills from SierraPine, following concerns from the government about the transaction’s anticompetitive effects in MDF.

The proposed acquisition would have given Flakeboard a 58 percent market share for the thicker and denser grades of MDF sold on the West Coast, reducing competition between Flakeboard and SierraPine.

Bill Baer, Assistant Attorney General of the Antitrust Division, said, ‘This deal threatened to weaken competition and raise MDF prices for customers on the West Coast.’

Both Flakeboard and SierraPine operate MDF mills in Oregon, with Flakeboard in Eugene and SierraPine in Medford. The nearest competing mill is several hundred miles away, placing Flakeboard and SierraPine as the two closest sellers of MDF to many customers.

The acquisition would have eliminated significant head-to-head competition between Flakeboard and SierraPine, allowing Flakeboard to raise prices by restricting MDF availability. It would also have enhanced the risk of coordination between Flakeboard and its few remaining rivals on output and prices.

Flakeboard is a Delaware corporation headquartered in Ontario, Canada, with annual revenues from its MDF business of approximately $380 million in 2013. SierraPine, a California limited partnership headquartered in Roseville, California, had annual revenues of approximately $70 million from its MDF business in 2013.

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