Gypsum industry news

Japan: Chiyoda Ute has issued a share sales request as part of ongoing plans to form a joint-venture with Germany-based Knauf. Knauf is expected to acquire the outstanding shares. Shares in Chiyoda Ute will then be delisted in late July 2022. The move follows a tender offer from Knauf that was issued in April 2022. The eventual plan is form a joint-venture between the companies with Knauf holding a 75% share.

Australia: Cohiba Minerals has received notification that it has successfully secured a 5-year extension of its exploration licence for its Pyramid Lake gypsum mine in south-western Western Australia. The new lease will expire on 4 July 2026.

The company says that it has recommenced its application for a mining lease for the high-grade area of the Pyramid Lake mine, which is not covered by its present lease. It says that it had previously delayed the process due to a change in its application conditions.

Cohiba Minerals previously announced the planned expansion in December 2020 as part of a countrywide expansion of its extraction activities, towards which it was raising US$1.5m through a share purchase plan.

Australia: Boral has rejected a proposed US$5/share takeover bid by Seven Group Holdings. The building materials producer received the bid on 10 May 2021 and then rejected it the following day, according to the Financial Review newspaper. Seven Group Holdings started buying shares in Boral in March 2020 and reached a 23% stake in the company by April 2021. Boral has continued a share buy-back programme it commenced in April 2021 as part of its response to the takeover attempt. Sources quoted by the newspaper also expect Boral to work with investment bank Jarden Australia in retaliation to Seven Group Holdings’ actions.

Australia: Boral has sold its 50% stake in USG Boral to Germany-based Knauf for US$1.02bn. The profit on sale after tax will go towards reducing the group’s net debt by 21% to US$1.15bn from US$1.45bn. This will leave a US$763,000 surplus for reinvestment or return to investors.

Following on from the sale, Boral has launched a share buy-back, ending in April 2022. It intends to purchase 10% of shares on issue. The group says that the USG Boral sale proceeds will fund the investment.

Chief executive officer and managing director Zlatko Todorcevski said “The sale of our 50% interest in USG Boral to Knauf for an attractive premium creates substantial value for Boral’s shareholders. The sale enables Boral to reduce net debt to our current target and create surplus capital available for return to shareholders, which is consistent with Boral’s financial framework.” He added “We believe that an on-market buy-back is the most effective method of returning this surplus capital to our shareholders.”

Australia: Cohiba Minerals has announced plans to raise US$1.5m through a share purchase plan. It plans to use the money to expand its mineral extraction operations across Australia, including the finalisation of a mining lease for its Pyramid Lake gypsum mine in Western Australia.

The company said, “Some of the funding will also be applied to working capital to achieve these ends.”

Switzerland: Saint-Gobain has started to sell its entire stake in Sika through its subsidiary Schenker-Winkler Holding (SWH). It previously acquired a 10.75% interest in Sika indirectly through the acquisition of 100% of SWH shares from the Burkard family in May 2018 as part of a global agreement with the Burkard family and Sika.

Saint-Gobain attempted to takeover Sika through acquiring a share of the company owned by the Burkard family in 2014. However, a legal counteraction followed and an attempt to transfer shares of Sika from the Burkard family was blocked by a Swiss court in late 2016. Saint-Gobain and Sika eventually ended the takeover attempt in May 2018 by retaining a 10.75% share in Sika, sales of other shares and other benefits. Following a two-year ‘lock-up period’ Saint-Gobain says it decided to dispose of its stake in Sika. It added that Sika chose not to exercise its right of first offer.

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: 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.