German building materials supplier Gebr Knauf KG has entered into an agreement to acquire the international businesses of US company Armstrong World Industries Inc, on top of its $US7 billion acquisition of Chicago-based USG Corp. In New Zealand, the Commerce Commission is considering the USG merger’s competition impacts, and said last week it would also take the AWI takeover into account.
The commission is seeking submissions by Friday 1 February and is scheduled to make a decision on the application by Monday 11 March.
The main impact appears to be in the supply of suspended ceiling components.
Knauf operates globally. It manufactures & supplies a range of products including plasterboard, cement board, metal profiles, plasters & suspended ceiling components. In New Zealand, Knauf imports & supplies tiles & grids used for modular suspended ceilings, and insulation products.
USG is a global manufacturer & supplier of building materials and makes a similar range of products. In New Zealand, USG operates through its 50%-owned joint venture with Australian company Boral Ltd, USG Boral Building Products NZ, which supplies suspended ceiling components & other building materials through third party distributors.
USG Boral in turn owns 50% of another Australian supplier active in New Zealand, Rondo Building Services Pty Ltd, in partnership with CSR Ltd. Rondo manufactures & supplies various metal building products in New Zealand & Australia, including steel ceiling grids.
Knauf & USG submitted to the Commerce Commission that they compete in New Zealand only in the supply of modular suspended ceilings.
Separately from its proposed merger with USG, Knauf has entered into an agreement to acquire the Europe, Middle East, Asia & Asia-Pacific businesses of US company Armstrong World Industries Inc, a global manufacturer & supplier of building products, including modular suspended ceilings. As AWI imports & supplies ceiling tiles and grids into New Zealand, the Commerce Commission said the AWI transaction would result in overlap in the supply of modular suspended ceiling components in New Zealand.
Knauf, which owned 10.6% of USG, agreed a takeover price of $US44/share with USG’s biggest shareholder, Warren Buffett’s Berkshire Hathaway Inc, last June. Shareholders approved the takeover in September.
Knauf gained conditional European Commission approval for its AWI takeover on 7 December. The conditions include a requirement to divest certain mineral fibre tile & grid operations to approved third parties in 11 European countries. AWI expects the takeover to be completed in the first half of 2019.
21 December 2018: Knauf & USG seek NZ clearance for merger
Attribution: Commerce Commission, Knauf, USG, AWI.