U.S. building products company USG Corp on Tuesday said it agreed to open talks to sell itself to Germany’s Gebr Knauf AG, a sale that could benefit Warren Buffett’s Berkshire Hathaway Inc, USG’s largest shareholder.
Shares of USG rose to their highest since August 2007.
USG had in March rejected a $5.9 billion takeover proposal by Knauf, its second-largest shareholder, that valued the wallboard maker at $42 per share.
But USG changed its mind after Berkshire, which holds a roughly 31 percent stake, and two major proxy advisory firms recommended voting against four USG board nominees at the Chicago-based company’s May 9 annual meeting.
Merger talks may not succeed. USG signaled it might hold out for more than $42 per share and that Knauf “will see value in excess” of its original bid.
“Given USG’s having publicly endorsed in a recent investor presentation that it views its intrinsic value at $45 to $52 per share, I don’t think they’re that far apart from getting a deal over the finish line,” said Garik Shmois, a senior analyst at Longbow Research, who rates USG “neutral.”