USG Corporation (NYSE: USG) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company is the center of a breaking story at the moment that suggests that it has turned down a takeover bid. Of course, the news is leading to excitement among investors, sending the stock on a run for the top. Today, we’ll talk about the news, what we’re seeing from the stock, and what we’ll be watching for with regard to USG ahead.
USG Rejects Takeover Bid
As mentioned above, USG Corporation is having an overwhelmingly strong start to the trading session this morning as news is breaking that the company has rejected a takeover bid. According to various reports, the company’s biggest shareholders, Berkshire Hathaway, has proposed to allow Knauf Entities to purchase all of Berkshire’s shares at a premium of around 25%.
The news actually came out as a result of a filing with the SEC on Monday made by Berkshire. However, shortly after the filing was released, USG announced that its board of directors had unanimously rejected the transaction. In a statement, USG offered the following:
The board carefully evaluated it and determined that it substantially undervalues the company and is not in the best interest of all of USG’s shareholders… As outlined at our investor day, we expect our strategy to drive further revenue growth, margin expansion and free cash flow — all of which will position us to deliver profitable growth and increased shareholder value.
The above statement was followed up by Steven Leer, non-executive chairman at USG. Here’s what he had to offer:
Our board is always looking for ways to deliver value to all of our shareholders, but Knauf’s opportunistically timed proposal is wholly inadequate as it does not reflect USG’s intrinsic value, including the significant opportunities ahead of us… We are confident that the strategy we presented on March 8, 2018 at our investor day will deliver significantly more value to our shareholders than Knauf’s proposal.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that it’s important to keep a close eye on the news. After all, the news moves the market. In this particular case, the news proved to be overwhelmingly positive. With the rejected takeover offer, USG Corporation is showing incredible confidence in their ability to drive value for shareholders. So, it’s no surprise to see that the stock is making a run for the top today. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:37), USG is trading at $39.57 per share after a gain of $6.06 per share or 18.08% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on USG. After rejecting a takeover offer that offered a premium of just over 25%, it’s clear that management is confident in growth. So, it will be exciting to see how the company executes ahead. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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