Gebr. Knauf KG will acquire the outstanding shares of USG Corp. (NYSE:USG) in a transaction valued at approximately $7 billion, the firms jointly announced Tuesday. 

USG shareholders will receive $44 per share, which consists of $43.50 per share in cash payable upon closing of the transaction and a $0.50 per share special dividend that would be paid following shareholder approval of the transaction. The price represents a premium of 31 percent to USG’s unaffected closing price of $33.51 and a 36 percent premium to the $32.36 average closing price for the preceding 12-month period. 

The transaction was unanimously approved by USG’s Board of Directors. Berkshire Hathaway has agreed to vote its shares in favor of the transaction. As of Monday, Berkshire Hathaway and its subsidiaries own approximately 31 percent of the issued and outstanding shares of USG.

The combined company will maximize Knauf and USG’s highly complementary businesses, products and global footprint to better meet the needs of both companies’ end-market customers, they said. Following the close of the transaction, USG will continue to be managed locally in the United States. The Chicago-based firm has a manufacturing plant in Cloquet.

“We are excited to enter into an agreement to acquire USG. As a long-term USG shareholder, we greatly admire USG’s strong brands, leading market positions in North American wallboard and ceilings and highly talented employee base. We look forward to building on USG’s strong presence in North America,” said Alexander Knauf, general partner of Knauf.

“As a family-owned company with a long-term focused business outlook, we believe Knauf is the ideal partner for the business as we intend to make significant investments in USG’s operations and its people,” added Manfred Grundke, general partner of Knauf. “Our long-term investments will benefit all of USG’s stakeholders, including employees, customers and suppliers.”

Jennifer Scanlon, president and chief executive officer of USG, added, “Our Board has worked diligently to evaluate all strategic options to maximize value for our shareholders, and we are pleased to have reached this agreement which provides our shareholders with significant and certain cash value. We believe this transaction will create new opportunities for both companies’ customers and will benefit USG’s employees who will be part of a truly global building products company. Alexander, Manfred and their team have made clear their high regard for our team, and we are confident that Knauf will help to ensure the long-term success of USG’s operations, brands and employees.”

The transaction is expected to close in early 2019, subject to customary closing conditions, including regulatory approvals and approval by USG shareholders.

The transaction is not subject to any financing conditions. The transaction will be financed from existing cash and committed debt financing.