French construction materials maker Saint-Gobain agreed to pay $1.4 billion for US finishing products manufacturer Continental Building Products.
The target’s shareholders will receive $37 per share in cash, which is a 3.5% premium to the stock’s closing price on Tuesday, the two companies said.
Following closure, Continental will be merged into a newly created subsidiary of the construction company. Both boards approved the deal, but Continental shareholders must vote on the takeover and regulators must clear it.
Saint-Gobain’s reacted by sliding 2.4% in early trading, as analysts contend the deal is pricey.
In 2019, Continental is expected to report about $510 million in revenue, the buyer said. Funds will be provided by divestments of some non-core assets, Saint-Gobain added.
“The acquisition of Continental Building Products is a unique opportunity allowing Saint-Gobain to move to the forefront of plasterboard and construction solutions in North America,” said Saint-Gobain’s chairman and CEO Pierre-Andre de Chalendar.
In a conference call, De Chalendar told reporters that the company would look into more acquisitions in 2020. The company is pursuing a transformation program aimed at enhancing shareholder value.
Citi provided advice to Continental , while Gibson, Dunn & Crutcher offered legal counsel. Lazard and Morgan Stanley served as financial advisers to Saint-Gobain, while Cleary Gottlieb Steen & Hamilton acted as its legal counsel.
