ABC Supply Co. and USG Corp. have entered into a definitive agreement in which ABC Supply will acquire USG’s building product distribution business, L&W Supply Corp. for total cash consideration of $670 million.

The transaction is subject to customary closing conditions, including regulatory approvals and is expected to be completed before the end of the year.

“We are thrilled to welcome the associates, customers and suppliers of L&W Supply into the ABC family,” said Keith Rozolis, ABC Supply’s president and CEO. “As a world-class distributor of interior building materials, L&W reinforces ABC’s leadership position in building materials distribution and helps set the stage for our next phase of growth.”

“The sale of L&W Supply is transformative for USG Corp., enabling us to right-size our balance sheet and accelerate profitable growth,” said James Metcalf, chairman, president and CEO of USG Corp. “This transaction sharpens our focus on manufacturing and innovation and creates a new strategic relationship with ABC Supply.”

Completion of the transaction will allow USG to reduce debt and achieve its target leverage ratio, accelerate high return investments in its Gypsum and Ceilings businesses through advanced manufacturing initiatives and position the company to consider future capital returns to shareholders. The sale of L&W Supply is also expected to dampen USG’s overall earnings cyclicality as well as provide opportunity for growth in the independent specialty dealer channel.

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