ABC Supply Co. Inc. agreed to acquire the L&W Supply Corp. building product distribution business from USG Corp. (NYSE: USG) for $670 million in cash. L&W Supply is one of the largest distributors of gypsum wallboard and suspended ceiling tiles in the United States, serving its customers from a nationwide footprint of 136 distribution branches.

ABC Supply is the largest wholesale distributor of roofing, siding, windows and gutter materials in the U.S. The acquisition of L&W Supply will allow it to expand into the interior of the building through the sale of gypsum wallboard and suspended ceiling tiles and grid.

Headquartered in Beloit, Wisconsin, ABC Supply was founded by Ken and Diane Hendricks in 1982 and operates more than 600 locations in 49 states. The privately held company had sales of approximately $5.9 billion in 2015, it said, and is a 10-time winner of the Gallup Great Workplace award (2007-2016).

“As a world-class distributor of interior building materials, L&W reinforces ABC’s leadership position in building materials distribution, and helps set the stage for our next phase of growth,” said Keith Rozolis, ABC Supply’s president and chief executive.

“The sale of L&W Supply is transformative for USG Corporation, enabling us to right-size our balance sheet and accelerate profitable growth,” said James S. Metcalf, chairman, president, and CEO of USG Corp. “This transaction sharpens our focus on manufacturing and innovation and creates a new strategic relationship with ABC Supply.”

The sale will allow USG to reduce debt and achieve its target leverage ratio, accelerate high return investments in its Gypsum and Ceilings businesses through advanced manufacturing initiatives, and position the company to consider future capital returns to shareholders, it said. The deal is also expected to dampen USG’s overall earnings cyclicality as well as provide opportunity for growth in the independent specialty dealer channel.

The deal is subject to customary closing conditions, including regulatory approvals, and is expected to be completed before the end of 2016.

J.P. Morgan Securities LLC and Goldman, Sachs & Co. are serving as financial advisers to USG. Jones Day is serving as legal adviser to USG. RBC Capital Markets and Deutsche Bank are serving as financial advisers and Kirkland & Ellis, Leo Law, and McDerrmott, Will & Emery as legal advisers to ABC Supply.

USG Corp. is a manufacturer and distributor of innovative, high-performance building systems through its United States Gypsum Company, USG Interiors LLC, and L&W Supply Corp. subsidiaries, and its USG Boral Building Products joint venture.

Headquartered in Chicago, USG’s worldwide operations serve the commercial, residential, and repair and remodel construction markets, enabling our customers to build the outstanding spaces where people live, work and play. USG wall, ceiling, exterior sheathing, flooring underlayment and roofing systems provide leading-edge building solutions, while L&W Supply branch locations efficiently stock and deliver building materials throughout the U.S. USG Boral Building Products is a leading plasterboard & ceilings joint venture across Asia, Australasia, and the Middle East. USG has a market capitalization of $4.49 billion.

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