NEW YORK (TheStreet) -- Shares of USG (USG) were jumping 8.48% to $30.40 on heavy trading volume mid-afternoon Monday after the Chicago-based building materials manufacturer entered into a definitive agreement to sell its distribution unit to ABC Supply for $670 million.
USG said that it could resume dividend payments after a 15-year hiatus following the deal's close, Bloomberg reports.
The proceeds from the transaction will go toward repaying debt, which CEO Jim Metcalf said in a conference call will free up cash.
The company plans to reinvest in the business and eventually return some cash to shareholders by repurchasing shares or paying a dividend.
"We now have flexibility from a financial standpoint that we haven't had for many, many years," Metcalf said in a conference call cited by Bloomberg.
USG ended its dividend in 2001 following asbestos litigation that pushed the company into debt.
Over 4.23 million shares of the company's stock have traded so far today vs. the 30-day daily average of 1.32 million shares.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
TheStreet Ratings rated this stock as a "hold" with a ratings score of C+.
The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, a generally disappointing performance in the stock itself and poor profit margins.
You can view the full analysis from the report here: USG