- Combines USG’s best-in-class building
products technologies and strategic assets in Asia, New Zealand and
the Middle East with Boral’s leading plasterboard manufacturing and
distribution footprint in Asia and Australia
- Leading share positions in most markets
served and uniquely positioned for synergistic expansion
- US$1.6 billion1 50/50 joint venture
with operations in 12 countries across Asia, Australasia and the
Middle East
- USG to make upfront cash payment to
Boral of US$500 million on completion2, with potential additional
earn out payments to Boral of up to US$75 million
Boral Limited (ASX:BLD) and USG Corporation (NYSE:USG) today
announced that they have entered into agreements to form a
strategic joint venture to create a world-leading building
business, USG Boral Building Products. The 50/50 joint venture will
leverage the two companies’ iconic brands, complementary geographic
footprints and technological expertise to deliver a unique
portfolio of building products across Asia, Australasia and the
Middle East.
Boral will contribute its Gypsum division to the joint venture,
which includes its plasterboard operations in Australia and Asia.
USG, the largest North American manufacturer of plasterboard, will
contribute its Asian and Middle Eastern businesses, as well as
exclusive access to its world-leading ceilings, cement board, fibre
board, lightweight plasterboard and joint compound building
products technologies in the joint venture’s territory.
Bringing together the game-changing technologies and expertise
of USG with Boral’s leading manufacturing and distribution network
in the region creates a vehicle that will deliver a superior
offering to one of the fastest growing plasterboard regions in the
world. This combination is expected to position the business with a
significant competitive advantage and market leadership position
for the long-term.
“The transaction is a major step forward for Boral and our
vision is to create a world-leading interior linings business in
Asia, Australasia and the Middle East,” said Boral’s CEO &
Managing Director, Mike Kane. “The joint venture strategically
aligns with Boral’s goal to grow earnings from Asia over the
longer-term by effectively leveraging our extensive distribution
position with complementary building products and markets. In
addition to equipping the Gypsum division for long-term accelerated
growth in Asia, the joint venture with USG creates a strong
competitive advantage for the Australian plasterboard business
through the application of game-changing technologies,
significantly strengthens Boral’s financial position and provides
greater strategic flexibility to the Boral group. This joint
venture will be value accretive for our shareholders.”
USG’s Chairman, President and CEO, Jim Metcalf, stated, “We are
excited by the prospects for profitable growth through this
strategic partnership. We have long been focused on our strategic
plan to diversify our earnings and differentiate our business
through innovation. The joint venture with Boral, Asia’s leading
plasterboard manufacturer and distributor, gives USG the reach to
immediately expand our world-leading building products operations
outside North America, and enables both companies to more
effectively capitalize on market opportunities in some of the
world’s highest growth construction markets.”
The roll-out of new technologies across the joint venture
operations will be phased over two years and involve a total
investment of approximately US$50 million, which is expected to be
self-funded through the joint venture.
The Joint Venture is anticipated to benefit from significant
synergies, which will ramp up over time and are expected to exceed
US$50 million per annum within three years of the new technologies
being rolled out. Synergies will come from manufacturing and
freight cost savings and will also include revenue enhancements
generated by a superior product offering and complementary products
that will be sold through existing sales channels.
Frederic de Rougemont, CEO of Boral Gypsum and appointed CEO of
the joint venture, said: “The combination of our gypsum and related
businesses in Asia, Australasia and the Middle East provides an
unparalleled manufacturing and distribution footprint, encompassing
some of the highest growth markets in the world. The joint
venture’s access to USG’s unrivalled technology and continued
innovation will provide the business with superior performing
products that are lighter, stronger and more efficient to
manufacture, transport and install. This will build on Boral’s
well-established gypsum operations in the region, creating a
formidable and sustainable leadership position.”
The joint venture will be owned 50% by Boral and 50% by USG. In
order to achieve an interest of 50% in the joint venture, USG will
pay Boral total cash payments (equalisation payments) of up to
US$575 million. USG’s equalisation payments to Boral will occur in
tranches, with a portion conditional on the business meeting
budgeted targets, as follows:
- US$500 million upon deal agreement
completion;
- US$25 million on the 3rd anniversary of
completion if joint venture earnings targets have been achieved at
that time; and
- US$50 million on the 5th anniversary of
completion if joint venture earnings targets have been achieved at
that time.
The joint venture will have 633 million m2 (6.8 BSF) of
plasterboard manufacturing capacity supplemented by an extensive
portfolio of complementary building product operations spanning 12
countries. Management of the joint venture will be shared between
Boral and USG with Frederic de Rougemont from Boral Gypsum
appointed as CEO and Paul Monzella from USG Corporation appointed
as CFO. USG will appoint the Chairman, Jennifer Scanlon, with the
right to appoint chairman alternating every two years.
Targeted completion is currently anticipated to occur on or by
31 January 2014 and is subject to certain closing conditions,
including Foreign Investment Review Board (FIRB) approval, third
party consents, and other conditions precedent as are customary for
this type of transaction.
Further detail about the transaction, the joint venture assets,
agreed joint venture terms and company specific impacts are
outlined in the accompanying presentation.
A joint-CEO presentation and conference call
for investors will take place today at 10.30am (Australian
Eastern Daylight Standard Time) / 6.30pm (US Central Time).
Dial-in: Australia 1800 098 754 / +61 2
9338 7300; USA 1888 400 8039; Canada 1866 927 0848; Hong Kong 800
967 072; Singapore 800 616 2252; UK: 080 8234 2459.
Conference ID: 81902152
The presentation will also be webcast
via www.boral.com.au and
www.USG.com.
USG Corporation:
USG Corporation is a manufacturer and distributor of innovative,
high-performance building systems through its United States Gypsum
Company, USG Interiors, LLC, L&W Supply Corporation and other
subsidiaries. Headquartered in Chicago, USG Worldwide operations
serve the commercial, residential, and repair and remodel
construction markets, enabling our customers to build the
outstanding spaces where people live, work and play. USG wall,
ceiling, exterior sheathing, flooring underlayment and roofing
systems provide leading-edge building solutions, while L&W
Supply branch locations efficiently stock and deliver building
materials throughout the United States. USG and its subsidiaries
are proud sponsors of the U.S. Olympic and Paralympic teams and the
Canadian Olympic team. For additional information, visit
www.usg.com.
Boral:
Boral is a global building products and construction materials
group, headquartered in Sydney, Australia. With leading positions
in Cement & Construction Materials in Australia; Plasterboard
in Australia and Asia; and Cladding and Roof Tiles in the USA,
Boral produces and distributes a broad range of materials and
products including quarry products, cement, fly ash, pre-mix
concrete, asphalt, clay bricks, clay and concrete roof tiles,
concrete masonry products, plasterboard, windows and timber. See
www.boral.com.au for more information.
USG Cautionary Statement:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
related to management’s expectations about future conditions.
Actual business, market or other conditions may differ materially
from management’s expectations and, accordingly, may affect our
sales and profitability or other results and liquidity. Actual
results may differ materially due to various other factors,
including: economic conditions, such as the levels of new home and
other construction activity, employment levels, the availability of
mortgage, construction and other financing, mortgage and other
interest rates, housing affordability and supply, the levels of
foreclosures and home resales, currency exchange rates and consumer
confidence; capital markets conditions and the availability of
borrowings under our credit agreement or other financings; our
substantial indebtedness and our ability to incur substantial
additional indebtedness; competitive conditions, such as price,
service and product competition; shortages in raw materials;
changes in raw material and energy costs; volatility in the
assumptions used to determine the funded status of our pension
plans; the loss of one or more major customers and our customers’
ability to meet their financial obligations to us; capacity
utilization rates for us and the industry; our ability to expand
into new geographic markets and the stability of such markets; our
ability to successfully enter into and operate the joint venture
with Boral Limited, including risks that our joint venture partner,
Boral Limited, may not fulfill its obligations as an investor or
may take actions that are inconsistent with our objectives; our
ability to protect our intellectual property and other proprietary
rights; changes in laws or regulations, including environmental and
safety regulations; the satisfactory performance of certain
business functions by third party service providers; our ability to
achieve anticipated savings from cost reduction programs; the
outcome in contested litigation matters; the effects of acts of
terrorism or war upon domestic and international economies and
financial markets; and acts of God. We assume no obligation to
update any forward-looking information contained in this press
release. Additional information concerning these and other factors
may be found in our filings with the Securities and Exchange
Commission, including the “Risk Factors” in our most recent Annual
Report on Form 10-K.
1 Asset value of US$1.6bn is subject to finalisation of fair
valuation and completion adjustments, and final foreign exchange
rate at the date of completion
2 Targeted completion is currently expected to occur in January
2014
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20131016006596/en/
USG CorporationMatthew AckleySenior Manager, Investor
RelationsTelephone: +1
312-436-6263investorrelations@usg.comorRobert WilliamsSenior
Director, Corporate CommunicationsTelephone: +1 312 436
4356Rewilliams@usg.comorBoral LimitedKylie FitzGeraldGroup
Communications & Investor Relations DirectorTelephone: +61 2
9220 6591 or +61 401 895 894kylie.fitzgerald@boral.com.auorBoral
Limited ABN: 13 008 421 761
Boral (ASX:BLD)
Historical Stock Chart
From Oct 2024 to Nov 2024
Boral (ASX:BLD)
Historical Stock Chart
From Nov 2023 to Nov 2024
