USG Corp. (USG) to Sell L&W Supply Unit in $670M Deal

August 29, 2016 7:32 AM EDT

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ABC Supply Co., Inc. and USG Corporation (NYSE: USG) 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 ABC family,” 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 is being held by USG Corporation today at 9:00 a.m. Eastern time (8:00 a.m. Central time) during which USG senior management will discuss the Transaction. The conference call will be webcast on the USG website,, in the Investor Relations section, where the accompanying presentation materials can be found. The dial-in number for the conference call is 1-800-315-2944 in the United States and Canada (1-847-413-2929 for other international callers), and the pass code is 43285667. After the live webcast, a replay of the webcast will be available on the USG website. 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.

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