Gypsum industry news
Warren Buffett to vote against USG 13 April 2018
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.
USG urges shareholders for support in director election 13 April 2018
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.
