Gypsum industry news

US: The Gypsum Association has elected Charles R Harrison as the chair of its board of directors. Harrison is the Vice President Technology & Product Innovation of the Gypsum Division of Georgia-Pacific. Other appointments that have been elected include USG’s Albert R Zucco as the vice-chair of the board, CertainTeed Gypsum’s Peter Mayer as treasurer and the Gypsum Association's Stephen H Meima as the secretary. Continental Building Products’ Timothy Power is the past chair of the board. Officers were elected at the meeting of the Association’s board of directors in Jacksonville, Florida. All terms are for one year and are effective from 1 May 2018.

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: USG has blamed falling sales for its wallboard business on prices rises and inclement weather. The net sales for its wallboard and surfaces business fell by 6% year-on-year to US$441m in the first quarter of 2018 from US$469m in the same period in 2017. Its operating profit fell by 38% to US$49m from US$79m. Overall the company’s sales rose by 2.5% to US$786m.

“Our wallboard volumes were impacted by the timing of our US wallboard price increase and the frequent storms that affected many regions of the country. However, we are encouraged to see shipping volumes increase over the last six weeks, as our Sheetrock brand and industry leading technology continue to be preferred by contractors,” said Jennifer Scanlon, president and chief executive officer of USG.

The company said that its wallboard price increased by 9% from the fourth quarter of 2017 and 1% from the first quarter of 2017, due to a price increase in January 2018. It added that wallboard costs were US$14m higher in the quarter year-on-year due to retained staff levels, incurred costs to start-up a lower-cost line and input cost inflation.

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 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.

US: The commissioners of New Hanover country in North Carolina have approved a US$0.35m incentive package for National Gypsum to open its Wilmington wallboard plant. The package will be offered over five years if the wallboard producer meets benchmarks that include investing US$25m in the plant and hiring at least 51 people at the site, according to the Star News newspaper. The city of Wilmington is also considering offering a package of US$0.23m. However, pollution concerns have been aired at public hearings about re-starting the plant.

US: USG has rejected a proposal by Germany’s Knauf to buy all of its shares for US$42/share in cash or for around US$5.9bn. Jennifer Scanlon, president and chief executive officer of USG, described the offer as ‘wholly inadequate’ and said that it ‘substantially’ undervalued the company. She added that USG had discussed the proposal on the telephone with Knauf in December 2017 and met in mid-March 2018. Knauf submitted a revised proposal around the same time.

US: Underwriters Laboratories (UL) has completed fire performance evaluation on some of USG’s Sheetrock Brand EcoSmart Panel products. The testing concluded that 15.9mm USG Sheetrock Brand EcoSmart Panels Firecode X (UL Type ULIX) and USG Sheetrock Brand EcoSmart Panels Mold Tough Firecode X (UL Type ULIX) is specified in more than 260 fire-rated wall, column, and floor- and roof-ceiling UL designs in which Type X or Type C panels are required.

“Quickly and accurately identifying gypsum panel types in the field – especially after the panels have been hung and the joints are finished – can be challenging. Consequently, fire performance may be compromised if Type X panels are inadvertently hung as the ceiling membrane, whether in steel or wood construction, when Type C panels are required,” said Nestor Sanchez, senior manager, building science at USG.

US: Taishan Gypsum and its owner China National Building Material Company (CNBM) have reached a US$1.38m settlement with Meritage Homes of Florida. According to the terms of the agreement Taishan and its fellow subsidiary Beijing New Building Material (BNBM) have agreed to pay Meritage in instalments by the end of March 2018. In return Meritage has agreed to withdraw all claims and allegations against Taishan Gypsum and BNBM following full receipt of the payment.