ABC Supply to Purchase L&W Supply from USG Corp. for $670 Million
ABC Supply Co., Inc. (“ABC Supply”) and USG Corporation (NYSE:USG) on Aug. 29 announced that they have entered into a definitive agreement in which ABC Supply will acquire USG’s building product distribution business, L&W Supply Corporation (“L&W Supply”), for total cash consideration of $670 million (the “Transaction”). The Transaction is subject to customary closing conditions, including regulatory approvals, and is expected to be completed before the end of 2016.
“We are thrilled to welcome the associates, customers, and suppliers of L&W Supply into the ABCfamily,” said Keith Rozolis, ABC Supply’s President and Chief Executive Officer. “As a world-class distributor of interior building materials, L&W reinforces ABC’s leadership position in building materials distribution, and helps set the stage for our next phase of growth”.
“The sale of L&W Supply is transformative for USG Corporation, enabling us to right-size our balance sheet and accelerate profitable growth,” said James S. Metcalf, Chairman, President, and CEO of USG Corporation. “This transaction sharpens our focus on manufacturing and innovation and creates a new strategic relationship with ABC Supply.”
Completion of the Transaction will allow USG to reduce debt and achieve its target leverage ratio, accelerate high return investments in its Gypsum and Ceilings businesses through advanced manufacturing initiatives, and position the company to consider future capital returns to shareholders. The sale of L&W Supply is also expected to dampen USG’s overall earnings cyclicality as well as provide opportunity for growth in the independent specialty dealer channel.
L&W Supply is one of the largest distributors of gypsum wallboard and suspended ceiling tiles in the United States, serving its customers from a nationwide footprint of 136 distribution branches. ABC Supply is the nation’s largest wholesale distributor of roofing, siding, windows and gutter materials. The acquisition of L&W Supply will allow it to expand into the interior of the building through the sale of gypsum wallboard and suspended ceiling tiles and grid.
J.P. Morgan Securities LLC and Goldman, Sachs & Co. are serving as financial advisers to USG in connection with the Transaction. Jones Day is serving as legal adviser to USG. RBC Capital Markets and Deutsche Bank are serving as financial advisers and Kirkland & Ellis, Leo Law, and McDerrmott, Will & Emery as legal advisers to ABC Supply.
A conference call was held by USG Corporation Aug. 29 during which USG senior management discussed the Transaction. The conference call was webcast on the USG website, www.usg.com, in the Investor Relations section, where the accompanying presentation materials can be found, along with a replay of the webcast. In addition, a telephonic replay of the call will be available until Wednesday, September 28, 2016. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 43285667.
About ABC Supply
Headquartered in Beloit, Wisconsin, ABC Supply was founded by Ken and Diane Hendricks in 1982 and operates more than 600 locations in 49 states. The privately held company had sales of approximately$5.9 billion in 2015 and is a 10-time winner of the Gallup Great Workplace award (2007-2016). More information is available online at www.abcsupply.com.
About USG Corporation
USG Corporation is a manufacturer and distributor of innovative, high-performance building systems through its United States Gypsum Company, USG Interiors, LLC, and L&W Supply Corporationsubsidiaries and its USG Boral Building Products joint venture. Headquartered in Chicago, USG’s worldwide operations serve the commercial, residential, and repair and remodel construction markets, enabling our customers to build the outstanding spaces where people live, work and play. USG wall, ceiling, exterior sheathing, flooring underlayment and roofing systems provide leading-edge building solutions, while L&W Supply branch locations efficiently stock and deliver building materials throughout the United States. USG Boral Building Products is a leading plasterboard & ceilings joint venture across Asia, Australasia, and the Middle East. USG and its subsidiaries are proud sponsors of the U.S. Olympic and Paralympic teams and the Canadian Olympic team. For additional information, visit www.usg.com.
