Boral, USG form $US1.6bn JV

Boral (BLD) and USG Corporation have entered into an agreement to form a strategic joint venture that will deliver a portfolio of building products across Asia, Australasia and the Middle East.

In a statement to the Australian Securities Exchange, Boral said the 50/50 joint venture, to be called USG Boral Building Products, would leverage the geographic footprints and technological expertise of both companies to create a $US1.6 billion partnership.

Boral will contribute its Gypsum division to the JV, which includes its plasterboard operations in Australia and Asia, while USG will contribute its Asian and Middle Eastern businesses.

Boral said it would receive a $US500 million upfront payment from USG to achieve a 50/50 split of ownership interest, with the potential to be paid up to an additional $US75 million depending on performance targets.

Boral said the majority of the $US500 million payment would be used to reducing the group's existing debt.

The group said its net profit after tax (NPAT) for fiscal 2014 would likely reduce by around $15 million, assuming the JV was completed in January next year.

Upon completion of the JV being formed, current CEO of Boral Gypsum Frederic de Rougemont will be appointed chief executive officer of USG Boral Building Products.

USG's Jennifer Scanlon will be appointed chairman.