German building material manufacturer Knauf has agreed to sell it USG's stake in its Australian joint venture with Boral in order to secure regulatory approval for its $10 billion acquisition of the US sheetrock maker.
The Australian Competition and Consumer Commission said on Thursday it would approve the merger after Knauf agreed to sell USG's stake in the joint venture, "either entirely or just in Australasia, to a buyer approved by the ACCC".
If a buyer can't be found within a certain time frame, Knauf will sell off certain other assets, the ACCC said.
""The transactions raised some significant concerns as it would lead to Knauf owning a 50 per cent stake in the joint venture, which is a significant competitor in several markets, including markets with limited alternatives for customers," ACCC commissioner Roger Featherston said.
A Boral spokeswoman said the ASX-listed company was still in talks with USG about buying out its stake, as disclosed in its annual report last month.
"Boral is under no obligation and will only invest if it is value creating for Boral's shareholders," the Sydney-based company said at the time.
It would use debt and proceeds from asset sales to finance any acquisition, Boral added.
Created in 2014 and headquartered in Singapore, USG Boral Building Products makes gypsum-based wall and ceiling lining systems and other building products.
It has 3,500 employees in Australasia and the Middle East, including several manufacturing plants in Queensland, NSW and Victoria.
For the half-year to December 31 the joint venture had $831 million in revenue and $84 million in earnings before interest and tax, according to Boral's annual report.
The ACCC has also approved Knauf's $465 million purchase of US-based Armstrong World Industries, which supplies modular suspended ceilings in Australia but has no manufacturing facilities in the country.
Boral shares were up 0.9 per cent, or 3.5 cents, to $4.485 at 1226 AEDT.
