Gypsum industry news

Australia: Boral, already dealing with financial difficulty even before the coronavirus pandemic, has withdrawn its full-year profit guidance and warned that it will likely have to re-work its complex wallboard buyout transaction with USG / Knauf. The US$441m deal, announced in August 2019 with Knauf will likely need to be changed, after the Australasian component of it attracted the attention of the Australian Competition and Consumer Commission (ACCC).

Under the complicated deal between USG Boral and Knauf, Boral was to pay US$200m for the other 50% of USG Boral that it did not already own in Australia, and US$241m for a 50% stake of the plasterboard joint venture in Asia. Knauf then had a call option to return to 50% ownership of the Australasian business within five years.

However, the ACCC is now looming as a roadblock. "As Boral and Knauf work with regulators as part of an ongoing process to obtain the relevant approvals, Boral's view now is that the ACCC is unlikely to approve the call option in relation to the Australian and New Zealand business," said Boral in a statement. This means a range of other options will be considered for the transaction.

US: The Bureau of Land Management (BLM) released its Final Supplemental Environmental Impact Statement (FSEIS) for US Gypsum’s proposed upgrades to its Split Mountain quarry near Plaster City. Imperial Valley Press has reported that the FSEIS will provide the basis for the BLM’s decision as to how much if any of the proposed US$110m’s-worth upgrade to grant clearance to proceed with. US Gypsum’s plans consist of a new water line and associated buried electrical lines between the quarry and its Plaster City plant and a water line between the plant and the Imperial Irrigation District's Westside Main Canal.

US: The Bureau of Land Management is seeking public comment on a proposed expansion of a USG gypsum quarry and associated water lines in Imperial County, California. USG wants to replace an existing water supply line to its Plaster City gypsum wallboard plant. The project will cost US$110m. The comment period will last until early September 2019.

Australia: Boral says that it may be ready to announce its plans with its USG Boral joint venture in August 2019. It is currently conducting due diligence on the joint venture’s operations in Asia following Knauf’s acquisition of USG in early 2019, according to the Australian newspaper. Forward options include established a new Asian joint-venture with Knauf or buying USG Boral’s gypsum wallboard business in Australia, New Zealand, Papua New Guinea and islands in the South West Pacific. However, Boral’s chief executive officer (CEO) Mike Kane said that there might not be enough time to arrange a deal by the publication of Boral’s full year results in August 2019.

US: Germany’s Knauf has completed its acquisition of USG. The company said that the purchase would create, “a global building materials industry leader that will be even better positioned to meet customers' needs by leveraging two highly complementary businesses, product portfolios and global footprints.”

"We greatly admire USG's strong brands, leading market positions in North American wallboard and ceilings, and highly talented employee base,” said Alexander Knauf, General Partner of Knauf. He added that the transaction was the largest acquisition in Knauf’s history.

Knauf agreed to buy USG in mid-2018 for US$7bn. The Australian Competition and Consumer Commission has approved the deal in late March 2019 subject to asset divestments relating to its Boral-USG joint venture.

Australia: The Australian Competition and Consumer Commission (ACCC) has approved Knauf’s acquisition of USG subject to asset divestments. The ACCC’s review focused on competition for the supply of wallboard, joint plaster compounds and treatments, metal profiles, fixed and modular suspended ceilings and insulation.

USG has a presence in Australia through its USG-Boral joint venture, which the ACCC says competes with Knauf and with Armstrong World Industries. The commission requires Knauf to divest USG’s interest in the joint venture, either entirely or just in Australasia, to a buyer approved by the ACCC. If divestiture of the joint venture interest is not achieved within a certain period, Knauf has agreed to divest certain other assets.

“The transactions raised some significant concerns as it would lead to Knauf owning a 50% in the joint venture, which is a significant competitor in several markets, including markets with limited alternatives for customers,” said ACCC Commissioner Roger Featherston.

Each acquisition is subject to review by different international competition agencies given the global nature of the Knauf’s acquisition of USG.

US: Stacy Kuszmaul, a plant manager at Delavan, Wisconsin and Deirdre Brockwell, staff researcher at Libertyville, Illinois have been recognised by the Manufacturing Institute as part of its annual Science, Technology, Engineering and Production (STEP) Ahead Awards. This marks the fifth consecutive year a USG employee has received this honour for her contributions to the manufacturing industry. The STEP Ahead Awards honour women who have demonstrated excellence and leadership in their careers and represent all levels of the manufacturing industry, from the factory-floor to the executive level.

Kuszmaul, a plant manager with more than 15 years' experience at USG, has been recognised for her operational acumen - particularly on new line startups - and has been a key driver in the company's Performance Materials division. Brockwell, a researcher in USG's ceilings lab, develops early stage concepts and conducts research that helps to expand USG's ceilings portfolio and respond to demands from architects, designers and contractors. She is also a Lean Six Sigma (LSS) Green Belt.

The Manufacturing Institute will recognise Kuszmaul, Brockwell and their fellow STEP Ahead award recipients during a reception in April 2019 in Washington, DC.

US: USG’s net sales grew by 4% year-on-year to US$3.34bn in 2018 from US$3.20bn in 2017. Its operating profit fell by 36% to US$227m from US$353m. Sales from its wallboard and surfaces division were stable at US$1.93bn but its operating profit fell by 19% to US$248m. The building materials company said that its operating profit in the fourth quarter was negatively affected due to lower sales caused by the timing of when it announced wallboard price increases. USG’s takeover by Germany’s Knauf is expected to close in early 2019.

US: Germany’s Knauf has appointed Christopher Griffin as the head of USG following the completion of its acquisition. Griffin, currently the chief executive officer (CEO) of Knauf Insulation North America, holds over 35 years of experience in the building materials industry, including 18 years with USG where he served in several senior roles, including chief operating officer.

"Bringing USG and Knauf together offers a compelling value proposition for both USG's and Knauf's customers. Knauf is committed to growing the strength of USG brands and its presence in North America. Our highly complementary businesses, products, and global footprint position the combined company to better meet the needs of customers. Following the closing of the merger, Knauf intends to maintain USG's existing corporate headquarters in Chicago," said Alexander Knauf, General Partner of Knauf.

Other personnel changes of note include the appointment of Joseph W Holmes as the Senior Vice President of the Gypsum Division. Stephanie Holdt, currently Vice President of Controlling at Knauf will join USG as Senior Vice President and chief financial officer.

US: Jennifer F Scanlon, the chief executive officer (CEO) of USG, plans to leave the company following the completion of its acquisition by Germany’s Knauf. The acquisition is expected to complete in early 2019 subject to regulatory approval and certain closing conditions.

Scanlon has held leadership roles at USG for 16 years. As a senior executive, she was involved in the company establishing the USG Boral Building Products joint venture and the divestiture of L&W Supply Corporation. Scanlon became USG’s president and CEO in November 2016.

“It has been a great privilege to serve as president and CEO of USG, and I am very proud of the work done by the USG team to align our strategy with customer needs and accelerate innovation,” said Scanlon.

In addition to Scanlon’s anticipated departure other members of USG’s executive team are expected to leave the company. These include: Matthew F Hilzinger, Executive Vice President and chief financial officer (CFO); Brian J Cook, Executive Vice President and Chief Administrative Officer; Dominic A Dannessa, Executive Vice President and Chief Customer and Innovation Officer; Gregory D Salah, Senior Vice President, USG Corporation and President, Gypsum; and Michelle M Warner, Senior Vice President, General Counsel and Corporate Secretary.