Market Overview

USG Corporation Announces Date for Special Meeting of Stockholders to Vote on the Merger Agreement with Knauf and Sets Related Record Date

Share:

A Conditional Special Dividend of $0.50 per Share Will Be Paid to USG
Stockholders if the Merger Agreement is Adopted

Holders of USG Stock on the Record Date Must Hold that Stock Through
the Conditional Special Dividend Payment Date to Receive the Dividend

USG Corporation (NYSE:USG) today announced that it will hold a special
meeting of stockholders at 9:00 a.m. (Central Time) on September 26,
2018, at USG's corporate headquarters, 550 West Adams Street, Chicago,
Illinois 60661-3676. At the special meeting, stockholders will be asked
to take action to, among other things, adopt the Agreement and Plan of
Merger (the "merger agreement"), dated as of June 10, 2018 with Gebr.
Knauf KG ("Knauf").

Stockholders of record as of the close of business on August 21, 2018
(the "record date"), will be entitled to vote at the special meeting and
any adjournment thereof. Under the terms of the merger agreement, each
share of common stock of USG, par value $0.10 per share ("USG common
stock") issued and outstanding immediately prior to the effective time
of the merger (other than shares of USG common stock owned by Knauf and
its subsidiaries, USG or certain other excluded holders pursuant to the
terms of the merger agreement) automatically will be converted into the
right to receive the closing consideration of $43.50 in cash.

The merger is subject to certain customary closing conditions, including
adoption of the merger agreement by the affirmative vote of holders of
at least 80 percent of the outstanding shares of USG common stock and
receipt of regulatory approvals. We expect the merger to close in early
2019.

In addition, as contemplated by the merger agreement, the USG board of
directors has declared a conditional special cash dividend of $0.50 per
share of USG common stock (the "conditional special dividend") payable
to holders of USG common stock as of the record date, August 21, 2018,
(subject to due bill trading as described below) if the merger agreement
is adopted by USG stockholders. If the merger agreement is adopted, the
conditional special dividend will be paid following certification of the
results of the special meeting, and USG will announce publicly the date
the conditional special dividend will be paid (the "conditional special
dividend payment date").

Important Information About the Special Cash Dividend

Due to the contingent nature of the conditional special dividend, USG
common stock will trade with "due bills," representing an assignment of
the right to receive the conditional special dividend, beginning on
August 20, 2018 (one business day prior to the record date) through the
conditional special dividend payment date (such period of time the "due
bill period"). AS A RESULT, HOLDERS OF USG COMMON STOCK ON THE RECORD
DATE MUST HOLD USG COMMON STOCK THROUGH THE CONDITIONAL SPECIAL DIVIDEND
PAYMENT DATE TO BE ENTITLED TO RECEIVE THE CONDITIONAL SPECIAL DIVIDEND.

PURCHASERS OF USG COMMON STOCK DURING THE DUE BILL PERIOD (EVEN IF THE
TRADE WILL SETTLE AFTER THE DUE BILL PERIOD) WHO HOLD SUCH SHARES OF
RECORD ON THE CONDITIONAL SPECIAL DIVIDEND PAYMENT DATE WOULD BE
ENTITLED TO RECEIVE THE CONDITIONAL SPECIAL DIVIDEND IN THE EVENT
STOCKHOLDER APPROVAL OF THE ADOPTION OF THE MERGER AGREEMENT IS
OBTAINED. STOCKHOLDERS THAT SELL USG COMMON STOCK DURING THE DUE BILL
PERIOD (EVEN IF THE TRADE WILL SETTLE AFTER THE DUE BILL PERIOD) ARE NOT
ENTITLED TO RECEIVE THE CONDITIONAL SPECIAL DIVIDEND IN THE EVENT
STOCKHOLDER APPROVAL OF THE ADOPTION OF THE MERGER AGREEMENT IS
OBTAINED. The due bill obligations are settled customarily between the
brokers representing the buyers and sellers of USG common stock. USG has
no obligations for either the amount of the due bill or the processing
of the due bill. Buyers and sellers of USG common stock during the due
bill period should consult with their broker before trading in USG
common stock to be sure they understand the effect of due-bill
procedures.

USG common stock will begin to trade ex-dividend on the first business
day after the conditional special dividend payment date. AS A RESULT,
INVESTORS WHO ENTER INTO TRADES TO PURCHASE USG COMMON STOCK ON OR AFTER
THE EX-DIVIDEND DATE WILL NOT RECEIVE THE CONDITIONAL SPECIAL DIVIDEND.

For U.S. federal income tax purposes, the conditional special dividend
will be characterized as a dividend to the extent paid out of USG's
current or accumulated earnings and profits through the end of the 2018
taxable year, as determined for U.S. federal income tax purposes. Based
on USG's estimate of its current and accumulated earnings and profits,
it currently expects that only a portion of the amount of the
conditional special dividend will be paid out of earnings and profits
and thus treated as a dividend for U.S. federal income tax purposes. To
the extent that the conditional special dividend exceeds USG's current
and accumulated earnings and profits, the excess will first reduce the
stockholder's basis in USG common stock, but not below zero, and then
will be treated as gain from the sale of the stockholder's USG common
stock.

Stockholders should review USG's definitive proxy statement, to be filed
with the Securities and Exchange Commission (the "SEC"). USG expects to
begin mailing the definitive proxy statement to its stockholders
promptly following the record date for the special meeting. The
definitive proxy statement will provide information for USG
stockholders, as well as instructions on voting and additional details
regarding the conditional special dividend and U.S. federal income tax
treatment. Shareholders should consult with their own tax advisors
regarding the particular tax consequences of receipt of the conditional
special dividend pursuant to the merger agreement in light of their
particular circumstances.

Cautionary Note Regarding USG Corporation Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 related
to USG management's expectations about future conditions, including but
not limited to, statements regarding the proposed merger with Knauf (the
"proposed transaction"), including expected timing, completion and
effects of the proposed transaction. In some cases, forward-looking
statements include, without limitation, any statement that may project,
indicate or imply future results, events, performance or achievements,
and may contain the words "expect," "intend," "plan," "anticipate,"
"estimate," "believe," "may," "will be," "will continue," "will likely
result" and similar expressions. Actual business, market or other
conditions may differ materially from USG management's expectations and,
accordingly, may affect its sales and profitability, liquidity and
future value. Any forward-looking statements represent its views only as
of today and should not be relied upon as representing its views as of
any subsequent date, and USG undertakes no obligation to update any
forward-looking statement. Among the risks, contingencies and
uncertainties that could cause actual results to differ from those
described in the forward-looking statements or could result in the
failure of the proposed transaction to be completed are the following:
the failure to obtain the necessary USG stockholder approval for the
proposed transaction; the failure to obtain necessary regulatory or
other governmental approvals for the proposed transaction, or if
obtained, the possibility of being subjected to conditions that could
result in a material delay in, or the abandonment of, the proposed
transaction or otherwise have an adverse effect on USG; continued
availability of financing or alternatives for the financing provided in
the Knauf debt commitment letter; the failure to satisfy required
closing conditions; the potential impact on the UBBP joint venture in
the event the proposed transaction is not completed, including the risk
that, in connection with the execution of the merger agreement, Boral
Limited has the right to exercise its option to acquire USG's ownership
of the UBBP joint venture; the risk that the proposed transaction may
not be completed in the expected timeframe or at all; the effect of
restrictions placed on USG and its subsidiaries' ability to operate
their businesses under the merger agreement, including USG's ability to
pursue alternatives to the proposed transaction; the risk of disruption
resulting from the proposed transaction, including the diversion of
USG's resources and
management's attention from ongoing business
operations; the effect of the announcement of the proposed transaction
on USG's ability to retain and hire key employees; the effect of the
announcement of the proposed transaction on USG's business
relationships, of operations, financial condition, the market price of
USG's common stock and businesses generally; the risk of negative
reactions from investors, employees, suppliers and customers; the
outcome of any legal proceedings that may be instituted against USG
related to the proposed transaction; the amount of the costs, fees,
expenses and charges related to the proposed transaction; and the
occurrence of any event giving rise to the right of a party to terminate
the merger agreement. Information describing other risks and
uncertainties affecting USG that could cause actual results to differ
materially from those in forward-looking statements may be found in
USG's filings with the SEC, including, but not limited to, the "Risk
Factors" in USG's most recent Annual Report on Form 10-K and most recent
Quarterly Report on Form 10-Q.

Additional Information and Where to Find It

This press release relates to the proposed transaction involving USG and
Knauf. In connection with the proposed transaction, USG intends to file
with the SEC and mail or otherwise provide to its stockholders a proxy
statement on Schedule 14A (the "Proxy Statement"). This press release
does not constitute an offer to sell or the solicitation of an offer to
buy any securities or a solicitation of any vote or approval, and is not
a substitute for the Proxy Statement or any other document that USG may
file with the SEC or send to its stockholders in connection with the
proposed transaction. USG STOCKHOLDERS ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT, WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. Investors and security holders will be able to
obtain the documents (when available) free of charge at the SEC's web
site, http://www.sec.gov,
and USG's website, www.usg.com,
and USG stockholders will receive information at an appropriate time on
how to obtain transaction-related documents for free from USG. In
addition, the documents (when available) may be obtained free of charge
by a request in writing to USG at 550 West Adams Street, Chicago,
Illinois 60661-3676, attention: Corporate Secretary.

Participants in Solicitation

USG and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the holders of USG
common stock in respect of the proposed transaction. Information about
the directors and executive officers of USG is set forth in the proxy
statement for USG's 2018 annual meeting of stockholders, which was filed
with the SEC on March 29, 2018, USG's proxy supplement, which was filed
with the SEC on April 20, 2018, and in USG's Annual Report on Form 10-K
for the fiscal year ended December 31, 2017, which was filed with the
SEC on February 14, 2018. Other information regarding the participants
in the proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the
Proxy Statement and other relevant materials to be filed with the SEC in
respect of the proposed transaction when they become available.

About USG Corporation

USG Corporation is an industry-leading manufacturer of building products
and innovative solutions. Headquartered in Chicago, USG serves
construction markets around the world through its Gypsum, Performance
Materials, Ceilings, and USG Boral divisions. Its wall, ceiling,
flooring, sheathing and roofing products provide the solutions that
enable customers to build the outstanding spaces where people live, work
and play. Its USG Boral Building Products joint venture is a leading
plasterboard and ceilings producer across Asia, Australasia and the
Middle East. For additional information, visit www.usg.com.

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