Knauf buying United States building products maker USG in about $7 billion deal

German building materials maker Knauf is buying American building products maker USG in an approximately $7 billion deal.

The family-owned Gebr. Knauf KG said Monday it will pay $44 per USG share to acquire the company, which operates a wallboard production plant on the Tennessee River in Bridgeport, Alabama.

The purchase price for USG is a 31 percent premium from its most recent price and includes $43.50 per share in cash payable once the transaction closes and a special dividend of 50 cents per share that would be paid after shareholders approve the deal.

Berkshire Hathaway and its subsidiaries, which own about 31 percent of USG’s outstanding stock, have agreed to vote in favor of the transaction.

USG will keep its headquarters in Chicago.

The deal is expected to close early next year.

The companies have been negotiating for the past three months since longtime USG shareholder Warren Buffett teamed up with the German bidder to sell the company.

USG opened the door to private talks after weeks of public resistance in early May ahead of its annual shareholder meeting, when proxy advisory firms Institutional Shareholder Services Inc and Glass Lewis & Co sided with Buffett’s push to engineer talks.

USG had called the initial takeover offer “wholly inadequate, opportunistic” given the company’s improving fortunes under a turnaround plan.

USG CEO Jennifer Scanlon said Monday that her company’s board had evaluated all strategic options to maximize value for shareholders and believes the deal will benefit employees and create new opportunities for both companies’ customers.

The Berkshire Hathaway investment dates back to 2001, when Buffett helped the company out of bankruptcy with a loan that was later converted to a stake in the company’s equity so large that a wholesale acquisition of the entire company remained one of the few ways for Berkshire to exit the investment without pushing down the share price.