BPB plc (“BPB”) announces that it has reached agreement for the purchase of the wallboard and ceiling tile businesses of Celotex Corporation (“Celotex”) in the USA, subject to regulatory approval and other technical conditions, with completion expected in July 2000. The purchase consideration is $345 million (£230 million) in cash on a debt-free basis and will be financed using existing committed facilities.

For the year to 31 August 1999, the wallboard and ceiling tile businesses of Celotex had combined sales of $291 million, EBITDA of $77 million and pre-tax profit of $63 million; the combined net assets at 31 August 1999 were $221 million. They employ some 1,400 people.

The acquisition of Celotex considerably strengthens BPB’s existing North American presence. Celotex holds a share of almost 4% of the US wallboard market, selling over 100 million square metres per annum from four plants in Iowa, Ohio, Wyoming and Florida, with commissioning soon of a newly constructed 65 million square metre plant in Kentucky at a cost of $72 million, of which $32 million had been spent by 31 August 1999. It has secure sources of gypsum and also operates a dedicated 65,000 tonne per annum wallboard liner mill in Illinois which will supply approximately half the liner requirements of the merged businesses.

Celotex meets 10% of the North American demand for ceiling tiles, supplying a range of mineral fibre and laminated products from five plants in Michigan, Wisconsin, Indiana, Pennsylvania and Mississippi. Ceiling tiles and wallboard are sold through similar routes to market and this acquisition represents a significant progression in the development of BPB’s strategy to provide fast-track, lightweight building systems using shared operations, logistics and customers. The Celotex operations also complement BPB’s existing European leadership in gypsum-based ceiling tiles and provide the foundations for a global ceilings business with pro forma sales of around £100 million per annum.

Integration of the Celotex operations with BPB’s Canadian subsidiary will provide opportunities to lower the annual operating costs by over $15 million and enhance BPB’s existing market positions in the USA.

Commenting on yesterday’s agreement Richard Cousins, BPB’s Chief Executive said:

“The acquisition of the Celotex wallboard and ceiling tile businesses will secure one of our key strategic objectives in gaining a direct presence in the American internal linings market. When added to Westroc’s existing wallboard sales, Celotex will establish BPB as the fourth largest producer with an 8 to 9% share of the 3 billion square metres of annual sales in North America, a region representing more than 50% of world demand and with long term growth of 3 to 4% per annum.”

BPB’s preliminary announcement of results and final dividend for the year to 31 March 2000 follows shortly after this acquisition announcement.

• Like a number of other American gypsum companies, Celotex has in the past suffered substantial asbestos-related product liability claims, which eventually forced it into Chapter 11. Under the terms of the resulting bankruptcy court order which became effective on 30 May 1997, BPB’s purchase of Celotex assets is protected against all past, present and future asbestos-related liabilities, which have been assumed by, and are the sole responsibility of, an asbestos settlement trust.
  
• BPB has a successful track record of operating in North America, spanning almost half a century. BPB Westroc is now Canada’s leading gypsum wallboard company, with a market share of over 40%. Operating six plants across the continent, the company has over the past few years also established a meaningful presence in northern USA through exports.
  
• BPB is the world’s leading supplier of plasterboard (“wallboard”) systems and building plasters, serving markets in over 50 countries. Annual plasterboard sales already exceed 650 million square metres.

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