USG Corporation (USG - Free Report) joined hands with the Zawawi Group of Oman to expand in the fast growing building product markets of the Middle East and India. USG is expected to invest about $60 million over the next two years under the strategic partnership.
In the first phase of the partnership, USG will acquire 55% interest in Zawawi Gypsum, through a joint venture with Zawawi Group. Zawawi Gypsum has the mining rights to a gypsum quarry in Salalah, Oman. Salalah has shipping access to many ports in India and the deal would ensure steady supply of gypsum for USG’s wallboard plants and cement plants to be set up in India. Quarry mining operations are expected to start in the third quarter of 2013.
In the next phase, the company would build and operate a new wallboard plant in the Salalah Free Zone, Oman, through a 50/50 manufacturing joint venture with Zawawi Minerals. The plant is expected to operate from the fourth quarter of 2013.
USB intends to use its strong brand name and technology along with Zawawi’s resources and management expertise, to expand its market share in India and the Middle East and thus will ensure profitability in the long term.
USG Corporation carries a Zacks #2 Rank in the near term (Buy rating). We currently have a Neutral recommendation on USG Corporation.
Headquartered in Chicago, USG Corporation produces wall, ceiling, flooring and roofing products. The company caters to the residential and non-residential construction markets, repair and remodel construction markets, and industrial processes.