Topic: How To Invest

Spinoffs, Takeovers and Special Situations Hotline – Friday, May 11, 2018

Article Excerpt

USG CORPORATION, $41.75, symbol USG on New York, manufactures gypsum wallboard (drywall), wallboard finishing materials, tile backers and underlayment, and ceiling tiles. Germany’s Knauf Group holds a 10.5% stake in USG and is its second-largest shareholder behind Berkshire Hathaway Inc. (symbols BRK.A and BRK.B on New York). On March 15, 2018, Knauf offered $5.9 billion, or $42 per share, for the company. However, USG rejected it as too low. Subsequently, Knauf mailed a letter to USG shareholders urging them to vote against the company’s nominees for four spots on its board of directors. On May 1, just days after USG announced lower profits, the company’s board authorized management to conduct negotiations with Knauf. Buffett, who owns 30.8% of the company, welcomes the negotiations. In the first quarter, ended March 31, 2018, the company’s sales increased 2.5%, to $786.0 million from $767.0 million a year earlier. Revenues were higher as a result of stronger sales from USG’s ceilings business. Earnings, excluding one-time items, were $46.0 million,…