Boral and USG team up for $1.1 billion 12-country joint venture

The ceiling and plasterboard business will pull synergies from both corporations.

Justin Loiseau

Justin Loiseau hails from the great united state of North Carolina, where he started his first business at the ripe age of five: melting crayons into candles. With the infamous Crayola Crash of 1994, Justin moved on to study economics and environmental studies as a Morehead-Cain Scholar at the University of North Carolina. He has worked in a variety of sectors across the globe, from management consulting to the United Nations, and once spent three months examining invasive snails in Vietnam. Justin discovered The Motley Fool in 2012 and it’s been love ever since. Creativity, contrarianism, kerfuffling… what more could one want? When he’s not playing the Fool, you can find Justin at the University of Auckland, where he is pursuing a Masters in Economics as a Rotary Ambassadorial Scholar. Justin finds biogas digesters fascinating and can unicycle a mile in seven minutes.

Published October 17, 2013 11:39 am AEDT

Construction company Boral (ASX: BLD) is teaming up with USG (NYSE: USG) to deliver plasterboard and ceilings to 12 countries across Asia, Australasia, and the Middle East. Dubbed USG Boral Building Products, the $1.1 billion joint-venture will allow the two companies to capitalize on each other's brands, locations, and institutional knowledge to push more of their products further and faster.

While Boral will push its gypsum division under the new JV, USG is allocating its Asian and Middle Eastern businesses, as well as proprietary plasterboard and ceiling technology.

"The transaction is a major step forward for Boral and our vision is to create a world-leading interior linings business in Asia, Australasia, and the Middle East," said Boral CEO and Managing Director Mike Kane in a statement today. "The joint venture strategically aligns with Boral's goal to grow earnings from Asia over the longer-term by effectively leveraging our extensive distribution position with complementary building products and markets.

In addition to equipping the Gypsum division for long-term accelerated growth in Asia, the joint venture with USG creates a strong competitive advantage for the Australian plasterboard business through the application of game-changing technologies, significantly strengthens Boral's financial position and provides greater strategic flexibility to the Boral group."

In a nod to the investing world, Kane made sure to add: "This joint venture will be value accretive for our shareholders." As USG ups its stake to 50%, the corporation will pay Boral $500 million when the deal closes, and an additional $75 million over the next five years. Subject to closing conditions, the joint venture should become official by February 2014.

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Motley Fool contributor Justin Louiseau does not own shares in any company mentioned.

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