Gypsum industry news

Japan: Chiyoda Ute’s revenue remained stable at US$165m in the first nine months of its financial year to 31 December 2021. Its net profit grew by 53% year-on-year to US$5.37m from US$3.52m in the same period in 2020. The gypsum wallboard producer reported that domestic house building had grown from March to December 2021 in tandem with a relaxation in coronavirus health measures from September 2021. It said that national gypsum wallboard shipping volumes grew by 2.4% to 344Mm² in the nine months to 31 December 2021. It added that due to the capital and business alliance it started with Knauf Group in January 2020 it viewed its future prospects as ‘competitive.’ In late 2019 the Germany-based construction materials company increased its shareholding in Chiyoda Ute to 45% from 26%.

US: Saint-Gobain is preparing to complete its acquisition of Continental Building Products in early February 2020. The announcement follows approval by Continental Building Products’ shareholders for the US$1.4bn deal.

Saint-Gobain said that the purchase of the gypsum wallboard producer would increases its presence in the US with its positioning in growth regions in the East and Southeast US. It would also widen its product portfolio and create the opportunity for at least US$50m in cost synergies and performance improvements by the end of the third year following the close of the transaction.

"This transaction will allow us to become a leading player in plasterboard and construction solutions across North America. It will enable the group to enhance its growth and profitability profile,” said Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain.

US: Eagle Materials has approved a plan to spin off its heavy materials and light materials businesses into two publicly traded entities, bowing to pressure from hedge fund Sachem Head Capital Management.

Sachem, which disclosed a 9% stake in Eagle Materials in March 2019, had earlier urged Eagle to separate its cement and wallboard businesses. After the split, Eagle’s heavy materials business will operate as a cement company, and the light materials business will continue to make gypsum wallboard and recycled paperboard.

“We believe that by pursuing the actions announced today the Eagle board is taking significant steps to unlock the company’s inherent value,” said Sachem Managing Partner Scott Ferguson, also commenting on planned changes to Eagle’s oil and gas proppants businesses.

The separation will be by a tax-free spin-off to Eagle shareholders and is expected to be completed in the first half of 2020. Both the new companies will have their headquarters in Dallas, Texas.

Switzerland: Saint-Gobain has ended its takeover battle for Sika by reaching an agreement with the company and the Burkard family. The deal will see it retain a 10.75% share in Sika. However, it has acquired Schenker-Winkler Holding’s 6.97% share from the Burkard family and it has sold this stake to Sika for Euro1.74bn. Saint-Gobain is expected to make a profit of Euro600m on this sale. Saint-Gobain will gain additional voting rights and all legal proceedings will be dropped. Saint-Gobain and Sika have also agreed to extend their business relationship in the future.

"This is a very positive settlement for Saint-Gobain, both from a financial and a strategic perspective. We materialise a substantial positive net result in excess of Euro600m for our shareholders. We also retain a minority stake in a great company and will enhance the relationship between the two groups," said Pierre-André de Chalendar, chairman and chief executive officer of Saint-Gobain.

Saint-Gobain attempted to takeover Sika through acquiring a share of the company owned by the Burkard family in 2014. However, legal counteraction followed and an attempt to transfer shares of Sika from the Burkard family was blocked by a Swiss court in late 2016.

US: The board of directors of USG has authorised its management to commence negotiations with Germany’s Knauf regarding a potential sale of the company. USG has advised Knauf that it is prepared to agree to a customary confidentiality agreement to facilitate sharing appropriate due diligence information. The board added that it, “…remains committed to acting in the best interests of all shareholders and will evaluate all options to do so.”

Knauf made a US$5.9bn bid for USG in March 2018 that was rejected. It then urged shareholders to vote against director nominees at USG’s annual general meeting. Warren Buffett, the chief executive officer Berkshire Hathaway, subsequently agreed to back the opposition to the directors. Berkshire Hathaway holds a 31% stake in USG and Knauf holds a 10.5% stake.

US: Knauf has complained about USG’s decision to block its request for the company’s current stocklist materials that would allow it to communciate with other USG shareholders. The German competitor to USG and minority shareholder said in a letter to the board of USG said, “Questioning Knauf’s ownership of USG stock and whether we have ‘proper purpose’ for requesting these materials are the tactics of an entrenched management trying to thwart our right to communicate with fellow stockholders in connection with the annual meeting.” Knauf also threatned legal action in Delware if USG failed to provide with the information it desired.

USG rejected a US$5.9bn bid by Knauf to take it over in late March 2018. Knauf subsequently sent a letter to USG’s shareholders asking them to vote against director nominations in protest against the rejection.

US: Warren Buffett, the chief executive officer Berkshire Hathaway, plans to oppose the election of four board nominees at USG. The move places pressure on USG to accept a hostile takeover bid for US$6.6bn by Germany’s Knauf, according to the Financial Times newspaper. “Berkshire’s present intention is to vote against the four directors proposed by management,” said Debbie Bosanek, an assistant to Buffett. The talks between USG and Knauf were enabled in March 2018 by Berkshire Hathaway offering to sell its 31% stake in USG to Knauf. The German company holds a 10.5% stake in USG.

US: USG has sent a letter to its shareholders urging them for their support for its director nominees as its forthcoming annual general meeting. The move follows a letter by Germany’s Knauf to USG’s shareholders asking them to vote against the nominees in protect against its failed bid for the company.

In its letter USG described Knauf, a 10.5% shareholder in the American company, as a competitor in the global gypsum market. It then outlined what it says was its interaction with Knauf over the proposed bid.

On 29 November 2017, Knauf first proposed to acquire USG for US$40.10/share. The board rejected this proposal and USG management subsequently spoke with Knauf to explain the board’s rationale and elements that impacted upon its ‘intrinsic value.’ It says that Knauf representatives attended its Investor Day on 8 March 2018.

On 12 March 2018, at Knauf’s request, Steven Leer, the non-executive Chairman and Jennifer Scanlon, the chief executive officer, met with Alexander Knauf and Manfred Grunke, Knauf’s Managing Partners, in person. Three days later, Knauf submitted its revised proposal of US$42/share, which was then only a 2% premium to USG’s recent 52-week high. The board says that it ‘carefully considered and rejected’ this revised proposal on the basis of USG’s ‘intrinsic value’, which had been increased by the positive impact of the reduction to US corporate tax rates, which had been signed into law after the initial Knauf proposal.

Subsequently, a letter from USG to Knauf on 26 March 2018 outlining the reason for its latest rejection suggested a telephone call with Knauf’s leadership. This call took place on 29 March 2018 and the board directed USG’s financial and legal advisors to meet in person with advisors from Knauf, which took place on 5 April 2018. On 10 April 2018, Knauf issued its letter to USG stockholders.

US: USG has said that Knauf has misinterpreted its rejection of US$5.9bn bid following a letter from Knauf to USG shareholders asking them to vote against director nominees. Knauf sent a letter to its fellow shareholders asking them to send a ‘clear message’ to the board of USG to ‘engage in discussions with Knauf’ regarding its offer.

"Knauf's letter mischaracterises our board's actions. Our board has clearly demonstrated that it is willing to evaluate any opportunity to deliver value to all of our shareholders. We have engaged with Knauf in good faith on multiple occasions since November 2017. Jenny Scanlon and I met in person with Alexander Knauf and Manfred Grundke on 12 March 2018. Additionally, at the direction of our board, our financial and legal advisors met with Knauf's advisors as recently as last Thursday. The fact is their proposal is wholly inadequate, opportunistic and does not reflect the intrinsic value of the company," said Steven Leer, USG's non-executive chairman of the board.

Jennifer Scanlon, the president and chief executive officer of USG, added that she had met with and spoken to Knauf's senior management ‘multiple times’ but that it had not indicated any willingness to pay ‘full value’ for the company.