France's Saint-Gobain to buy Continental Building for US$1.4b

Paris

FRANCE'S Cie de Saint-Gobain, one of the world's biggest building materials companies, has agreed to buy US drywall maker Continental Building Products in a deal worth US$1.4 billion, including debt.

Saint-Gobain agreed to pay US$37 per share in cash for Continental Building, according to a statement on Tuesday.

That represents a premium of 34.4 per cent to Continental Building's average share price in the 60 days ended Nov 11, the companies said.

Continental Building will be merged into a newly formed subsidiary of Saint-Gobain, which manufactures and distributes materials for homes, commercial buildings and infrastructure projects.

Continental Building rose as high as 13 per cent in New York trading on Tuesday, its biggest intraday jump since 2014.

The shares closed up almost 12 per cent to US$35.75, giving the Virginia-based company a market value of about US$1.24 billion.

The deal combination has been unanimously approved by the boards of both companies and is expected to close in the second half of 2020, according to the statement.

The potential transaction comes amid a slump in dealmaking in the building materials sector, despite falling production costs, sustained product demand in the US and a rebound in Europe.

There have been US$16.6 billion in building materials deals announced globally this year, a decline of about 38 per cent from a year ago.

The merger allows for about US$50 million in cost savings and performance improvements, the companies said in the statement.

Notre Dame Saint-Gobain is the world's largest producer of light building materials, including glass and roofing.

The company offered to help restore the stained glass windows of the Notre-Dame Cathedral in Paris, following a devastating fire in April.

The firm, based in Courbevoie, outside Paris, has a market value of about 20.8 billion euros (S$31.2 billion.)

Continental Building makes drywall for homes and businesses, primarily in the eastern US and eastern Canada, according to its annual report.

The company used to be the North American gypsum business of LafargeHolcim. Private equity firm Lone Star Funds agreed to acquire the company for about US$700 million in 2013 and took it public about a year later.

Citigroup is advising Continental Building on the deal while Gibson, Dunn & Crutcher is serving as legal counsel. Lazard and Morgan Stanley are both advising Saint-Gobain. BLOOMBERG