French material producer Saint-Gobain is hoping to increase its presence in the US market by buying Virginia-based plasterboard maker Continental Building Products for $1.4bn.
The deal, announced yesterday evening, is for Saint-Gobain to pay $37 per share in cash, a 3.5% premium to Continental’s closing price on Tuesday. It was approved unanimously by both boards of directors.
Saint-Gobain said the deal would allow better coverage and more efficient logistics services, particularly in high growth regions in the US.
It said the cost savings would amount to $50m by the end of the third year after the deal was implemented. The company added that Continental Building Products’ teams would be integrated into its North American operation, which would "be able to lean on their expertise and know-how".
Continental Building Products, which was founded by French materials firm Lafarge, employs about 650 people and mainly makes gypsum wallboards under the Bison brand, and complementary products such as joint compounds. It is expected to have sales of $510m and a pre-tax profit of $130m in 2019.
Following the deal, shares in Continental rose more than 11%, whereas Saint-Gobain’s fell 3%.
Pierre-Andre de Chalendar, Saint-Gobain’s chairman and chief executive, said the acquisition would allow his company "to move to the forefront of plasterboard and construction solutions in North America".
He told reporters on a conference call today (13 November) that Saint-Gobain would continue to examine further takeover opportunities next year, as the French company pursued a strategy of "transform and grow".