USG Corp. has announced two growth initiatives to expand its presence in the western United States. The company’s United States Gypsum Co. subsidiary plans to build a new SHEETROCK brand gypsum panel manufacturing plant in Stockton, Calif. In addition, L&W Supply, the company’s specialty distribution subsidiary, announced that it has entered into an agreement to acquire California Wholesale Material Supply, Inc. (CALPLY) for $280 million, including debt to be repaid at closing. The new low-cost wallboard plant will utilize state-of-the-art technology to position the company competitively to meet long-term West Coast demand for wallboard. The $220 million plant is expected to commence operations in 2010.

CALPLY is a building materials distribution company with annual sales approaching $600 million, 30 operating locations in seven Western states and Mexico and almost 900 employees. The acquisition of CALPLY is expected to enhance L&W Supply’s ability to serve its West Coast and Southwest customers. USG’s board of directors has approved the acquisition.

“These two initiatives complement one another, fit perfectly into our long-term vision to strategically grow USG and will enhance the company’s earnings per share,” said William C. Foote, chairman and CEO of USG Corp. “Over the long term, we are committed to replacing our older, higher-cost wallboard manufacturing capacity with new, low-cost capacity, thus solidifying our position as the industry’s low-cost producer. When it is completed in 2010, the new Stockton plant will replace two high-cost manufacturing lines in California that were closed previously. Most importantly, the new Stockton plant will support the growth of USG’s customers in one of the largest markets in the U.S., where wallboard demand over the last decade has been growing considerably faster than the rest of the country.”

Commenting on the expansion of the company’s distribution business, Foote said the acquisition of CALPLY will enable USG to continue efforts to expand the L&W Supply subsidiary, which contributed $2.5 billion to USG’s annual sales in 2006.