British Firm Offers $1.1 Billion for National Gypsum : Analysts Expect to See Higher Bids for No. 2 Wallboard Maker in U.S.

From Reuters

BPB Industries of Britain on Tuesday offered $1.1 billion for National Gypsum Co., the No. 2 U.S. wallboard producer, and investors were betting that bidding would rise.

BPB, a major wallboard producer and an industrial force in Europe, said it offered $48.50 a share for all of National Gypsum, which emerged from bankruptcy less than two years ago.

Charlotte-based National Gypsum said this was the first "outside" offer received since it rejected two unsolicited offers from companies led by C.D. Spangler, a former member of its board. Companies controlled by Spangler own 19% of National Gypsum.

The company was forced to seek protection from creditors under bankruptcy laws in 1990, after it was stung by asbestos liability costs linked to products it sold in the 1970s.

Since emerging from bankruptcy in July, 1993, National Gypsum has cut costs and boosted its profit margin, so it is an attractive property in the currently healthy building market, industry analysts said.

National Gypsum shares soared $4.75 to $49.25 in late trading on Nasdaq--more than the price offered by BPB and a strong signal that investors expect another bidder to emerge.

BPB, based in Slough near London, is already the biggest European wallboard producer, with over half the market. It said it is seeking a friendly merger to gain a toehold in the United States, the world's biggest building products market.

The new National Gypsum could be worth as much as $55 a share, or up to $1.3 billion, analysts said.

The company said a special committee of its five-member board will review the offer and respond.

"There is no specified timetable for that," Gypsum spokesman Allan Cecil said.

While the American housing market has been showing signs of weakness as interest rates rise, BPB still views National Gypsum as a good buy, analysts said.

"The opportunities to grow are limited, so you might see some very aggressive competition" for National Gypsum, said analyst Steven Charnock at Charterhouse Tilney in London.

Spangler, who led his takeover attempt through Delcor Inc., an investment company he leads, cannot be counted out. Last week, he hinted at a hostile takeover bid since National Gypsum has rejected Delcor's most recent offer. Its bid of $43.50 a share, made in November, was rejected Dec. 12.

Meanwhile, BPB said it would be willing to re-evaluate the price it offered after it completes a full review of National Gypsum's finances.

In a letter to National Gypsum Chairman Stephen Humphrey, BPB Chief Executive Jean-Pierre Cuny also indicated that the British company would have no trouble financing its offer.

BPB's pretax profit was about $170 million at current exchange rates and sales were about $1.8 billion for the fiscal year ended last March.

National Gypsum has 18 plants, three paper mills and eight mines and quarries in the United States. It owns the world's largest gypsum mine, in Nova Scotia, Canada.

It earned $83 million in 1994 on sales of $630 million, about 80% of which came from wallboard.

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