USG Corp. agreed to be acquired by Germany’s Gebr. Knauf KG for $7 billion, capping months of deal talks between the 2 building-materials corporations and USG’s largest investor, Warren Buffett’s Berkshire Hathaway Inc.
Below the deal introduced Monday, Knauf can pay USG shareholders $43.50 a share in money. Shareholders would additionally obtain a 50-cent-a-share particular dividend after they approve the transaction.
The deal was successful for Berkshire, which strayed from its sometimes passive funding strategy and pressed USG to enter negotiations. Berkshire owns 31% of the Chicago-based maker of Sheetrock gypsum drywall. Berkshire bought its USG stake at a median value of about $19 a share, in accordance with Mr. Buffett’s 2016 shareholder letter.
Berkshire has held USG shares for nearly 20 years, and Mr. Buffett mentioned in 2017 that the funding has been disappointing. The sale to Knauf permits Berkshire to promote its stake with out pushing down USG’s inventory worth.
Knauf, which already owns an 11% stake in USG, first provided $40.10 a share, then returned in March with a bid of $42 a share. On the time, USG mentioned the supply considerably undervalued the corporate and analysts speculated that Knauf would probably increase the supply.
Shareholders voted in opposition to the election of 4 administrators to the USG board in Might. It marked the primary time in Mr. Buffett’s reminiscence that his conglomerate has opposed an organization’s slate of nominees, he mentioned final month. Mr. Buffett has lengthy mentioned he received’t take part in hostile takeovers.
Within the case of USG,” we didn’t suppose that the administrators have been primarily doing their job,” Mr. Buffett mentioned on CNBC final month.
Shares in USG rose three.eight% as of noon Monday.
In ready remarks, USG Chief Govt Jennifer Scanlon mentioned the board “has labored diligently to guage all strategic choices to maximise worth.”
USG, which was based in 1902, has a turbulent historical past as a result of asbestos litigation. The corporate filed for chapter twice inside a decade, first in 1993 and once more in 2001. Berkshire backstopped a USG inventory sale in 2006. Two years later in the course of the housing bust, Berkshire invested $300 million in USG utilizing convertible notes.
“Eighteen years from the time we purchased the primary inventory and 12 years from the time we, in, impact, bankrolled the corporate by way of popping out of chapter, we’ve by no means obtained a dividend,” Mr. Buffett mentioned on CNBC in Might. “The earnings estimates, the brand new merchandise, and that form of factor, have fallen brief.”
Berkshire in 2014 agreed to pay an almost $900,000 penalty to settle U.S. allegations it violated antitrust legal guidelines by failing to report the acquisition of an fairness stake in USG. The problem got here when Berkshire transformed notes it had bought from USG into fairness.
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