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BPB bids 700m for US plaster giant

PLASTERBOARD giant BPB unveiled the building materials industrys largest-ever takeover bid this week when it offered US$1.12 billion (708 million) for National Gypsum, the second-largest plasterboard group in the US.

The bid would make BPB the worlds largest plasterboard producer adding 23 per cent of the US market to the half share of the European market and a dominant share in the Canadian market it already holds.

The groups shares fell 7p to 306p as some analysts warned that the company may be buying into a mature market which is at a cyclical peak. National Gypsums margins stand at 21 per cent compared with 13 per cent at BPB.

BPB said the deal would enhance earnings but warned that it might not reach agreement on terms with National Gypsum, which recently rejected two lower bids from other predators.

If BPB agrees terms the cash bid would be funded by debt and a new share issue. BPBs current gearing is low at 15 per cent.

BPB is offering to pay about 13.5 times National Gypsums 1994 after- tax profits of $83 million. National Gypsum which is debt-free had sales of around 400 million last year, compared with BPBs 1.15 billion.

In a letter to National Gypsum, BPBs chief executive, Jean-Pierre Cuny, said: We believe a combination of our complementary companies would create a strong competitor in the increasingly international gypsum business.

BPB said the North American plasterboard market had grown at an average compound level of 3.7 per cent per annum since 1980 and that it represented 50 per cent of the world plasterboard market.

Based in Charlotte, North Carolina, National Gypsum sells about 500 million sq m of plasterboard a year, making it the second-largest American producer after US Gypsum. The firm has 18 plasterboard plants, three paper mills and eight mines and quarries.

Speculation that Hanson was planning a major British takeover bid mounted last week after the group announced plans to sell a string of non-core US businesses for 855 million, and cut the groups gearing from 58 to 38 per cent. Hanson is thought to be seeking a less cyclical source of earnings which may prompt it to bid for a British water or power company.