$1.3 Billion Offered to Buy National Gypsum

Associated Press

A $1.3-billion proposal to acquire National Gypsum Co. in one of the biggest leveraged buy-outs in history was announced Monday by a group of top company officials and private investors.

Under the proposal--which would be the fifth-largest such deal in history if completed--the approximately 22.8 million shares of the Dallas company could be exchanged for a package of $923.4 million in cash and $387.6 million in securities.

In a leveraged buy-out, the buyers borrow money to acquire a company and repay the loans with earnings of the company or by selling some of its assets.

The buy-out by the investor group, which includes company Chairman John P. Hayes, must be approved by National Gypsum’s board and stockholders.


A company spokesman, Allan V. Cecil, declined to give details of the proposal before the board’s Monday afternoon meeting and would not comment on the reason for taking the company private.

Cash, New Debt Security

National Gypsum stock, which had jumped $4.25 a share on Friday, rose an additional $2.75 on Monday to close at $46.75 on the New York Stock Exchange. Trading volume Monday totaled 775,500 shares, compared to 320,200 last Friday.

The group proposed to pay $40.50 in cash and $17 in a new debt security for each of the company’s outstanding common shares.


The group said in a news release that it had obtained a written proposal from an undisclosed financial institution to represent and join a syndicate of banks in providing “a substantial portion” of the financing for the acquisition.

National Gypsum makes and supplies building products and services and is one of the nation’s largest producers of gypsum, a substance widely used in cement and plaster.

John Stanley, an analyst with the investment firm Wertheim & Co., said National Gypsum is on a “major upswing,” although construction materials is not considered to be a growth industry.

“Their principal product, gypsum, is probably one of the more positioned products; at least one of the most profitable,” he said.


13,000 Employees

Industry analysts also have said that the recent decline in home mortgage rates should continue to help improve the company’s earnings by strengthening home sales, a major market for its products.

The company, which employs about 13,000 workers, gets about 25% of its revenue from the residential market.

In the quarter ended Sept. 30, the company reported revenue of $467.9 million, up from $448.9 million in the same period last year. Net income for the period rose to $35.1 million from $28.1 million.


National Gypsum’s subsidiaries include American Olean, a leading U.S. producer of ceramic tile, and Binswanger, a maker of commercial and industrial glass products.

In addition to Hayes, other senior management members in the investment group are Vice Chairman John M. Thompson Jr. and James R. Voisinet, president and chief operating officer.