“The completion of the transaction is an important milestone in our joint venture with USG," said Boral CEO and managing director Mike Kane. "Our teams have come together effectively and productively and have great momentum and determination to deliver on the strategic imperatives of the joint venture."
The joint venture, named USG Boral Building Products, gives the companies reach across Asia, Australasia and the Middle East. This includes Boral's Gypsum division (which includes its plasterboard operations in Australia and Asia), as well as USG's Asian and Middle Eastern businesses.
Additionally, USG is giving the JV exclusive access to its ceilings, cement board, fibre board and lightweight plasterboard and joint compound building products technologies in the JV's territory.
“The joint venture gives USG an immediate, significant presence across some of the fastest growing construction markets in the world, and positions both USG and Boral to win over the long-term in Asia, Australasia, and the Middle East," said USG chairman, president and CEO Jim Metcalf. "Our teams will work quickly to deploy USG’s technologies to the facilities in the region and we expect that our combined efforts will enable the joint venture and its customers to achieve greater productivity and profitability.”
“The joint venture aligns with Boral’s goal to grow earnings from Asia and to transform the business over the longer-term through innovative product and manufacturing solutions," added Kane. "Boral’s balance sheet will also strengthen considerably as a result of the transaction.”
The terms of the deal involved a $500 million cash payment to Boral on behalf of USG, as well as an additional cash payment to Boral of $13 million based on a customary initial estimate of the net debt and working capital positions of the contributed businesses. Boral will also have the opportunity for up to $75 million in earn-out payments over five years provided the JV achieves certain performance targets.