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USG agrees to Knauf takeover
Posted on Tuesday, 12 June 2018 08:18
Gebr Knauf has broken down USG’s barriers with an increased offer to take over the firm after its first approach in March was rebuffed.

The German buyer has now tabled a USD 44.00 per share bid for the US-based sheetrock maker that values the company at around USD 7.00 billion in a deal expected to be funded from existing cash and committed debt financing.

Closing would not be subject to any funding conditions, the acquiror said in its press release; however, if the transaction is to complete in early 2019, it will still need to go through regulatory and shareholder approvals.

Under the terms of the offer, which follows a USD 5.00 billion proposal made earlier this year, Knauf will pay USD 43.50 per stock in cash and a USD 0.50 per share special dividend that will be compensated following the green light from USG’s current investors.

At USD 44.00 apiece, this represents a premium of 31.0 per cent to the target’s unaffected closing price of USD 33.51 on 23rd March 2018, and a premium of 36.0 per cent on USD 32.36 average trading value for the last 12 months.

In addition, USG, which claims to be an industry-leading manufacturer of building products, is valued at 11.6x its adjusted earnings before interest, taxes, depreciation and amortisation for the year to 31st March 2018.

Talks regarding a tie up of the two companies have been ongoing for the last three months after long-term investor Warren Buffett teamed up with Knauf to sell his stake of about 31.0 per cent.

Buffett’s Berkshire Hathaway, USG’s largest shareholder, is expected to receive about USD 1.91 billion of the proceeds from the sale; Knauf is the second biggest investor in the firm, with an interest of about 10.5 per cent.

The original offer of USD 42.00 per share was deemed inadequate.

However, chief executive of USG, Jennifer Scanlon, is in favour of the latest approach, saying: “Our Board has worked diligently to evaluate all strategic options to maximise value for our shareholders, and we are pleased to have reached this agreement which provides our shareholders with significant and certain cash value.

“We believe this transaction will create new opportunities for both companies’ customers and will benefit USG’s employees who will be part of a truly global building products company.”

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