EXHIBIT 99.1
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BMCA NEWS
Building Materials 1361 Alps Road, Wayne, NJ 07470 973 628-3000
Corp. of America
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FOR IMMEDIATE RELEASE
FOR MORE INFORMATION, CONTACT BUILDING MATERIALS CORPORATION OF AMERICA AT
973-317-5960
BMCA PROPOSES MERGER PROVIDING $35.00 PER SHARE CASH
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CONSIDERATION FOR ALL OUTSTANDING ELKCORP COMMON SHARES
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November 15, 2006 - Building Materials Corporation of America ("BMCA"), North
America's largest roofing manufacturer, which operates under the name GAF
Materials Corporation, today sent a letter to Thomas D. Karol, Chairman of the
Board of Directors and Chief Executive Officer of ElkCorp (NYSE: ELK) proposing
a merger agreement with Elk providing cash consideration for all outstanding Elk
common shares of $35.00 per share. The merger would not be conditioned upon
financing but would be subject to Hart-Scott-Rodino approval, the rescission of
Elk's poison pill, and other customary conditions.
The letter sent today to Mr. Karol by BMCA follows:
November 15, 2006
Mr. Thomas D. Karol
Chairman of the Board and CEO
ElkCorp
14911 Quorum Drive, Suite 600
Dallas, TX 75254-1491
Dear Tom:
It was good meeting with you, your colleagues, and advisors on Monday
evening in Dallas, and I appreciate your accommodating the meeting on such short
notice.
In response to your invitation to put our best foot forward, we want
you to know that BMCA is prepared, based upon publicly available information, to
enter into a merger agreement with Elk providing cash consideration for all
outstanding Elk common shares of $35 per share. The merger would not be
conditioned upon financing but would be subject to Hart-Scott-Rodino approval,
the rescission of Elk's poison pill, and other customary conditions.
As we have pointed out, we believe that BMCA is the highest and best
merger partner for Elk given BMCA's leading position in the industry and the
unique synergies which exist between our businesses. Because of our position in
the industry, we are well aware of the significant benefits of a merger between
our Companies as well as the difficult current operating environment and
significant long term challenges we both now confront.
Again, we are proceeding based upon publicly available information, and
should Elk decide to share confidential information with BMCA, we would hope to
see evidence of additional value that would enable BMCA to increase its price.
BMCA's proposal provides a compelling opportunity for Elk shareholders
to realize significant value for their shares in an all cash transaction with no
significant regulatory hurdles anticipated. It should be noted that the proposed
price represents an approximate 40% premium over Elk's closing price on November
3rd ($25.18 per share), the trading day immediately preceding BMCA's filing of
its 13D and Elk's announcement of its sale process, and a meaningful premium
over Elk's current trading price.
As we provided you and your colleagues and advisers with a "heads up"
at our Monday night meeting and again earlier today, we are proceeding along
this line only after Elk and its advisors have chosen to exclude us from the
on-going sale process because of their insistence that we enter into what we
regard as an onerous standstill agreement. The proposed agreement would
unreasonably tie BMCA's hands and prevent us under any circumstances from making
an offer directly to shareholders.
By way of background, in our teleconference on Sunday, November 5th,
you agreed that Elk would include BMCA as part of its ongoing sale process and
provide us, subject to a confidentiality agreement, with due diligence similar
to that which Elk had already provided other bidders. You indicated further that
the process had been underway for sometime and that you were expecting to
complete it by the end of November. Parenthetically, we still do not understand
why we were not invited into the sale process at inception given the fact that
BMCA would have had to be considered Elk's most logical strategic merger
partner.
Shortly after the November 5th conference, your advisors provided BMCA
with confidentiality and standstill agreements, the latter containing
unreasonable demands concerning our Elk ownership position and BMCA's future
course of action. By way of example, under Elk's proposed agreement, it could
terminate the process and discussions with our Company for any reason at any
time while preventing us, for a period of two years, from submitting our offer
directly to Elk shareholders.
In addition, under the Elk proposal, as your advisors have
acknowledged, the Company reserved the right to change the rules of the process
at any time, notwithstanding the fact that this could have the effect of
creating an unlevel playing field -- and all this while BMCA would be obligated
to stand still. We had similar objections to other provisions which would
operate to prevent us from submitting an offer to shareholders under other
circumstances as well. Although we continued to seek throughout the past week a
reasonable compromise, your advisors reiterated that your Company had little or
no flexibility.
At our meeting in Dallas on Monday night, we stated that we could
simply not see our way clear, as a substantial Elk shareholder, to enter into
the standstill agreement that your advisors had proffered. We further went on to
indicate that it was Elk's choice as to whether BMCA would proceed as part of
your process or outside the process while BMCA stated that it was its strong
preference to participate in the process believing that course to be in the
interests of both companies. Based upon Elk's decision, you and your advisors
have left us no alternative but to proceed in this fashion.
We reiterate our interest in a friendly transaction and remain open to
any further discussion that you and your advisors wish to pursue.
All the best.
Sincerely,
/s/ Robert B. Tafaro
Robert B. Tafaro
President and Chief Executive Officer
cc: Elk Board of Directors
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BMCA INFORMATION
Building Materials Corporation of America, which operates under the name of GAF
Materials Corporation, is an indirect subsidiary of G-I Holdings Inc. With
annual sales in 2005 approximating $2.0 billion, BMCA is North America's largest
manufacturer of residential and commercial roofing products and specialty
building products.
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This news release is for informational purposes only and is not an offer to buy
or the solicitation of an offer to sell any ElkCorp shares, and is not a
solicitation of a proxy.
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FORWARD-LOOKING STATEMENTS
This release contains some forward-looking statements as defined by the federal
securities laws which are based on our current expectations and assumptions,
which are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those anticipated, projected or implied. We
undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.