USA-based Eagle Materials’ board has approved a plan to separate its heavy materials and light materials businesses into two publicly-traded entities. Earlier this month, Sachem Head Capital Management, which disclosed a nine per cent stake in the company in March, reportedly urged the company to separate its cement and wallboard businesses, according to Reuters.
Eagle Materials’ heavy materials business will operate as a cement company, while the light materials business will continue to produce gypsum wallboard and recycled paperboard.
"Based upon our recent comprehensive review of various strategic, operational and financial alternatives, the Eagle board and management team believe this separation will provide each of the businesses with the financial flexibility to pursue its own growth strategies and operating priorities, and will develop the appropriate capital structure and allocation priorities to generate long-term growth for all shareholders. Accordingly, we have determined that now is the optimal time to pursue this separation," said Mike Nicolais, chairman, Eagle Materials.
The separation will be by a tax-free spin-off to company shareholders and is expected to be completed in the first half of 2020, according to a press release. The new businesses will remain headquartered in Dallas, Texas.
"We believe that by pursuing the actions announced today the Eagle board is taking significant steps to unlock the company’s inherent value," said Scott Ferguson, managing partner of Sachem Head. Sachem Head has also now confirmed that it will be withdrawing its director nominations.
Published under Cement News